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E2-1 Multiple-Choice Questions on Use of Cost and Equity Methods [AICPA Adapted] Select the correct answer for each of the following questions. 1. Peel
E2-1 Multiple-Choice Questions on Use of Cost and Equity Methods [AICPA Adapted] Select the correct answer for each of the following questions. 1. Peel Company received a cash dividend from a common stock investment. Should Peel report an increase in the investment account if it uses the cost method or equity method of accounting? Cost Equity a. No No Yes Yes C Yes No Yes d. No 2. In 20X0, Neil Company held the following investments in common stock: 25,000 shares of B&K Inc.'s 100,000 outstanding shares. Neil's level of ownership gives it the ability to exercise significant influence over the financial and operating policies of B&K 6,000 shares of Amal Corporation's 309,000 outstanding shares. During 20X0, Neil received the following distributions from its common stock investments: $30,000 cash dividend from B&K November 6 November 11 December 26 3 percent common stock dividend from Amal $1,500 cash dividend from Amal The closing price of this stock was $115 per share. What amount of dividend revenue should Neil report for 20X0? a. $1,500. b. $4,200. c. $31,500. d. $34,200.
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