The correct question is:
An investee company incurs an extraordinary loss during the period. The investor appropriately applies the equity method. Which of the following statements is true?
A. Under the equity method, the investor only recognizes its share of investee's income from continuing operations.
B. The loss would be ignored but shown in the investor's notes to the financial statements.
C. The extraordinary loss should increase equity in investee income.
D. The extraordinary loss would not appear on the income statement but would be a component of comprehensive income.
E. The extraordinary loss would reduce the value of the investment.
Answer:
The extraordinary loss would reduce the value of the investment.
Explanation:
An extraordinary loss occurs because of an activity that does not frequently occur and is usually one-off. Outside usual activities of the business.
It is not expected to reoccur, and is reported in the income statement below income.
For example loss of stock of goods to fire outbreak, flood, or earthquake.
The value of investment is negatively impacted by extraordinary loss. It reduces Earnings per Share (EPS).
Answer:
Conversion costs: c.$390,500
Explanation:
Conversion costs are those production costs required to convert raw material to finished goods. Conversion costs include direct labor and manufacturing overheads costs.
Conversion Costs = Direct Labor cost + Manufacturing Overheads cost= Total Manufacturing Costs – Direct Material cost
With direct labor cost of $196,500; factory overhead cost of $194,000.
Conversion Costs = $196,500 + $194,000 = $390,500
Answer:
The correct answers are company sales potential; market potential.
Explanation:
This amount is known as the company sales potential. In addition, the marketing manager believes the total sales for the category to be $30 million annually for razors and razor blades for men. This is known as the market potential.
Answer: Callable bonds
Explanation: In simple words, callable bonds refers to the bonds that have an embedded option that the issuer of such bonds can retain them at a specific date and a t a specific price.
The issuer of bonds holds the right to call back bonds and the bondholders have an obligation to do so. Thus, the holders of such bonds bears a high risk relating to reinvestment as the issuer will only repurchase these bonds when the yield in market is lower than the yield they are paying to the bond holders.
Therefore, at the time of issuance such bonds offer higher yields than market.