When an equity method investment account is reduced to a zero balance a. The investor should establish a negative investment account balance for any future losses reported by the investee. b. The investor should discontinue using the equity method until the investee begins paying dividends. c. Future losses are reported as unusual items in the investors income statement. d. The
Chapter 1, Problems #5
When an equity method investment account is reduced to a zero balance
a. The investor should establish a negative investment account balance for any future losses reported by the investee.
b. The investor should discontinue using the equity method until the investee begins paying dividends.
c. Future losses are reported as unusual items in the investor’s income statement.
d. The investment retains a zero balance until subsequent investee profits eliminate all unrecognized losses.
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The correct answer is d. The investment retains a zero balance until subsequent investee profits eli…View the full answer
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Advanced Accounting
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni
ISBN: 978-1259444951