C reduce accumulated other comprehensive income aoci

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Unformatted text preview: s deferred tax liability. C. Reduce accumulated other comprehensive income (AOCI) for tax expense, and probably increase taxes payable. D. Reduce accumulated other comprehensive income (AOCI) for tax expense, and probably increase its deferred tax liability. 78. The equity method of accounting for investments in voting common stock is appropriate when: A. The investor can significantly influence the investee. B. The investor has voting control over the investee. C. The investor intends to hold the common stock indefinitely. D. The investor is assured of a continued supply of a valuable raw material. 79. Consolidated financial statements are prepared when one company has: A. Accounted for the investment using the equity method. B. Accounted for the investment as securities available for sale. C. Control over another company. D. None of the above is correct. 80. If Pop Company owns 15% of the common stock of Son Company, then Pop Company typically: A. Would record 15% of the net income of Son Company as investment income each year. B. Would record dividends received from Son Company as investment revenue. C. Would increase its investment account by 15% of Son Company income each year. D. All of the above are correct. 81. If Pop Company exercises significant influence over Son Company and owns 40% of its common stock, then Pop Company: A. Would record dividends received from Son Company as investment revenue. B. Would increase its investment account when Son Company declares dividends. C. Would record 40% of the net income of Son Company as investment income each year. D. All of the above are correct. 82. When using the equity method to account for an investment, cash dividends received by the investor from the investee should be recorded: A. As a reduction in the investment account. B. As an increase in the investment account. C. As dividend income. D. As a contra item to stockholders' equity. 83. When the equity method of accounting for investments is used by the investor, the investment acco...
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This document was uploaded on 07/05/2013.

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