Ch12 Clicker Questions

An unrealized loss on available for sale securities is a Reported under Other Expenses and Losses in the income statement b. Closed out at the end of the accounting period c. Reported as a separate component of stockholders' equity d. Deducted from the cost of investment

c. Reported as a separate component of stockholders' equity

Mission Inc earns $600,000 and pays cash dividends of $150,000 during 2016. Cox corporation owns 70,000 of the 210,000 outstanding shares of Mission. What amount should Cox show in the investment account at December 31, 2016 is the beginning of the year balance in the account was $50,000? a. $250,000 b. $180,000 c. $90,000 d. $198,500

d. $198,500 70,000 shares Cox owns / 210,000 total outstanding shares= 33% of shares are owned by Cox= needs to use equity method (as opposed to cost method) Cox's investment will increase by 33% of Mission's net income $600,000 * .33= $198,000 Cox's investment will decrease by 33% of Mission's dividend payout $150,000 * .33= $49,500 $50,000 + $198,000 - $49,500= $198,500

Under the equity method, the investor records dividends received by crediting a. Dividend Revenues b. Investment Income c. Revenue from Investment d. Stock Investments

d. Stock Investments