. An investor uses the equity method to account for an investment in common stock. Assume that (1) the investor owns more than 50 percent of the outstanding common stock of the investee, (2) the investee company reports net income and declares dividends during the year, and (3) the investees net income is more than the dividends it declares. How would the investors investment in the common stock of the investee company under the equity method differ at year-end from what it would have been if the investor had accounted for the investment under the cost method? The balance under the equity method is higher than it would have been under the cost method. The balance under the equity method is lower than it would have been under the cost method, but only if the investee company actually paid the dividends before year-end. The balance under the equity method is higher than it would have been under the cost method, but only if the investee company actually paid the dividends before year-end. The balance under the equity method is lower than it would have been under the cost method. 10. Required information

4. A corporation exercises significant influence over an affiliate in which it holds a 40 percent common stock interest. If its affiliate completed a fiscal year profitably but paid no dividends, how would this affect the investor corporation? Decrease book value per share. Result in an increased current ratio. Result in increased earnings per share. Increase asset turnover ratios.