The equity method records the initial purchase of an investment in voting common stock at _____. Each period, the investor treats as revenue its share of the _____ of the investee.The investor treats dividends declared by the investee as _____.
A) acquisition cost; dividends; income
B) acquisition cost; periodic earnings; a reduction of the investor's investment in stock of the investee account
C) present value of future cash flows; dividends; a reduction of the investor's investment in stock of the investee account
D) present value of future cash flows; periodic earnings; a reduction of the investor's investment in stock of the investee account
E) future value of present cash flows; dividends; a reduction of the investor's investment in stock of the investee account
Correct Answer:
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