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Purchaser Corporation Acquires 30% of the Outstanding Voting Common Shares

Question 32

Multiple Choice

Purchaser Corporation acquires 30% of the outstanding voting common shares of the Investee Corporation for $600,000.Purchaser Corporation acquires the investment in Investee Corporation by buying previously issued shares of Investee Corporation from other investors. Which of the following is/are true?


A) On the balance sheet, an investment accounted for with the equity method appears among noncurrent assets.
B) On the balance sheet, the amount shown generally equals the acquisition cost of the shares, plus Purchaser Corporation's share of Investee Corporation's undistributed earnings (or losses) since the date Purchaser Corporation acquired the shares, plus or minus amortization of any excess cost at the date of acquisition attributable to assets with limited lives.
C) On the income statement, Purchaser Corporation reports each period its share of Investee Corporation's income (or loss) as revenue (or expense) , as well as any amortization of excess cost.
D) Purchaser Corporation also recognizes its share of the investee's other comprehensive income.
E) all of the above

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