If 10% of the common stock of an investee company is purchased as a long-term in

Question

If 10% of the common stock of an investee company is purchased as a long-term investment, the appropriate method of accounting for the investment is

A. the preparation of consolidated financial statements.

B. the cost method.

C. the equity method.

D. determined by agreement with whomever owns the remaining 90% of the stock.

The following data are available for Bonita Corporation.

Net cash provided by operating activities is:

The following data are available for Concord Corporation.

Net cash provided by investing activities is:

Net income $206000 Depreciation expense 60200 Dividends paid 90600 Loss on sale of land 15000 Decrease in accounts receivable 30700 Decrease in accounts payable 44700

Explanation / Answer

1 The appropriate method of accounting for the investment is cost method 2 Net cash provided by operating activities =206000+60200+15000+30700-44700= 267200 3 Net cash provided by investing activities is = 225900+129300-69400= 285800

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