71) The cost method of accounting for portfolio investments is usually used when the investor holds less than 20% of the voting shares of the investee. 72) The journal entry to record the receipt of...





71) The cost method of accounting for portfolio investments is usually used when the investor holds less than 20% of the voting shares of the investee.



72) The journal entry to record the receipt of a cash dividend will include a credit to Retained Earnings.



73) The receipt of a stock dividend will require a memorandum entry in the accounting records to denote a new number of shares of stock held as an investment.



74) An investment in common shares acquired during 2010 at a cost of $46,000 has a market value on December 31, 2010, of $46,721. The adjusting entry requires a debit to long term investments (available for sale) for $721.



75) Short term investments are recorded at market value and reported on the balance sheet at cost.



76) Under the equity method the investor's share of dividends is treated as a return of investment.



77) If a company owns 49% of the stock of another business, cash dividends received from the investee company are generally recorded by decreasing the value of the Investment account.



78) If a company owns between 20 and 50% of the voting share of an investee it must use the equity method to account for its investment.



79) Under the equity method, the investor's share of dividends is treated as an increase in its investment.



80) The cost method is used to account for stock investments in which the investor company owns between 20% to 50% of another company's stock.





May 15, 2022
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