Acct559 (Advance Accounting)

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|1. (TCO A) Alpha Co. owns a 30% interest in Bravo Co. and exercises significant influence. Which of the following results in a |
|decrease in the investment account when applying the equity method? (Points : 5) |
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| [pic] Net income earned by the investor |
| [pic] Net income earned by the investee |
| [pic] Unrealized gain on intra-entity inventory transfers for the current year |
| [pic] Dividends paid by the investor |
| [pic] Purchase of additional common stock by the investor during the current year |
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|2. (TCO B) Lewis Co. paid cash for all of the voting common stock of Pastini Corp. Pastini will continue to exist as a separate |
|corporation. Consolidation entries for the business combination of Lewis and Pastini would be recorded in (Points