Course Hero Logo

Under the equity method of accounting for investments

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 4 - 6 out of 17 pages.

26.Under the equity method of accounting for investments, an investor recognizes its shareof the earnings in the period in which thea.investor sells the investment.b.investee declares a dividend.c.investee pays a dividend.d.earnings are reported by the investee in its financial statements.17 - 4
27.Dane, Inc., owns 35% of Marin Corporation. During the calendar year 2004, Marin had netearnings of $300,000 and paid dividends of $30,000. Dane mistakenly recorded thesetransactions using the fair value method rather than the equity method of accounting.What effect would this have on the investment account, net income, and retainedearnings, respectively?
*28.All of the following statements regarding accounting for derivatives are correctexceptthat
*29.All of the following are characteristics of a derivative financial instrumentexcepttheinstrument
Investmentsc.requires or permits net settlement.d.All of these are characteristics.*30.Companies that attempt to exploit inefficiencies in various derivative markets byattempting to lock in profits by simultaneously entering into transactions in two or moremarkets are calleda.arbitrageurs.b.gamblers.c.hedgers.d.speculators.
*31.The accounting for fair value hedges records the derivative at its

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 17 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
NoProfessor
Tags
1966, 1981, 1970, Available for Sale Securities

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture