HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
7th Edition
ISBN: 9780136505273
Author: MILLER-NOBLES
Publisher: PEARSON
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Chapter 10, Problem 5QC
To determine

Significant interest investments:

Significant interest investments are the equity securities, where the investor holds in between 20% to 50% of the voting stock. These securities are reported as long-term assets in the balance sheet. These investments are accounted for using the Equity method.

To identify: The way in which the dividends received will be recorded by the investor company owning 25% of the voting stock of Company P.

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If a company owns 25% of the voting stock of Pink Co. and can exercise significant influence, dividends received will be credited to Equity Investments—Pink Co. credited to Dividend Revenue. debited to Equity Investments—Pink Co. credited to Cash.
If a company owns 25% of the voting stock of Pink Co. and can exercise significant influence, dividends received will be a. credited to Equity Investments—Pink Co. b. credited to Dividend Revenue. c. debited to Equity Investments—Pink Co. d. credited to Cash.
The equity of an unincorporated business that makes a profit in the financial year is calculated as: Select one: a. Capital at the start of the year + capital introduced - profit for the year - drawings. b. Capital at the start of the year + capital introduced - profit for the year + drawings. c. Capital at the start of the year + capital introduced + profit for the year + drawings. d. Capital at the start of the year + capital introduced + profit for the year - drawings.
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