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Nadusha1986 [10]
4 years ago
10

A company has been using the fair-value method to account for its investment. The company now has the ability to significantly c

ontrol the investee and the equity method has been deemed appropriate. Which of the following statements is true?
A. A cumulative effect change in accounting principle must occur
B. A prospective change in accounting principle must occur
C.A retrospective change in accounting principle must occur
D. The investor will not receive future dividends from the investee
E. Future dividends will continue to be recorded as revenue
Business
1 answer:
kotykmax [81]4 years ago
8 0

Answer:

Option "C"is the correct answer to the following statement.

Explanation:

The retrospective method effect requires the development of new accounting procedures. In other terms, the retrospective method would affect the reporting of past time financial statements.

In this situation, the company will use the equity method at the place of the Fair-value method for calculating and control over their investment, so the above option is correct.

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Answer:

$749.57

Explanation:

equivalent annual annuity = (NPV x rate) / [1 - (1 + rate)⁻ⁿ]

  • using a calculator, the NPV = $2,630
  • rate = 13.1%
  • n = 5

equivalent annual annuity = ($2,630 x 0.131) / [1 - (1 + 0.131)⁻⁵] = $344.53 / 0.4596 = $749.57

The equivalent annual annuity is used to compare mutually exclusive projects and determine which yields the highest annual returns.

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Hope this helps!
6 0
3 years ago
At Infosoft Solutions, employees are encouraged to take care of their problems by working with one another and with customers, u
likoan [24]

Answer: Decentralized

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This is done by the seniors with the objective of effective running of operations within. The employees in such organisations usually remain more motivated than others.

In the given case, Infososft is encouraging their employees to take their own decisions while dealing with customers. Hence the transfer of authority for decision making is evident.

From the above we can conclude that the correct option is A.

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