Investment account and net income

Assignment Help Accounting Basics

Reference no: EM13141304

Poster Inc. owns 35 percent of Elliott Corporation. During the calendar year 2011, Elliott had net earnings of $300,000 and paid dividends of $36,000. Poster mistakenly accounted for the investment in Elliott using the cost method rather than the equity method of accounting. What effect would this have on the investment account and net income, respectively?

a. Understate, overstate

b. Overstate, understate

c. Overstate, overstate

d. Understate, understate

Reference no: EM13141304

Questions Cloud

What is an opportunistic pathogen : Describe in detail the positive and negative aspects of having a characteristic "normal flora" associated with various parts of the human body. Which parts of the body usually have resident normal flora, and what kinds are usually found in each o..

Find mean number of unpopped kernels for the store brand : Using the information provided in part (d) would you be surprised if a sample of 50 differences collected in this way resulted in a higher mean number of unpopped kernels for the store brand than for the name brand?

Yummy-pop ltd : Yummy-Pop Ltd makes lollipops in two sizes, large and giant. The company sells these lollipops to convenience stores, fairs, schools for fundraisers, and in bulk on the Internet.

What is the probability of having a child with o type blood : Leber's optic neuropathy is a genetic disease caused by a mutated gene carried in mitochondrial DNA. What would be the phenotype of their first child if a man with this disease married a woman who did not have the disease? What would be the result..

Investment account and net income : Poster mistakenly accounted for the investment in Elliott using the cost method rather than the equity method of accounting. What effect would this have on the investment account and net income, respectively?

Investment in pirates corporation stock : There were no other transactions between the two companies. Ignoring income taxes, Mets' statement of income for the year ended December 31, 2011, should include "Income From Investment in Pirates Corporation Stock" in the amount of:

Amount of amortization at each interest payment point : Larson Company issued $500,000 of 8%, 5-year bonds at 106. Assuming straight-line amortization and annual interest payments, what is the amount of the amortization at each interest payment point?

The american way of war : During the American Civil War, compare and contrast the warfighting styles of Generals Robert E. Lee and U.S. Grant. Which one do you believed more epitomized what strategist Russell Weigley later called the American Way of War?

Short-term investment basics : During 2010, Barney Company purchased marketable equity securities as a short-term investment and classified them as trading securities. The cost and market value at December 31, 2010, were as follows:

User Account

All Pages