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Rye Company Purchased 15% of Lena Company's Common Stock During

Question 56
Multiple Choice

Rye Company purchased 15% of Lena Company's common stock during 2019 for $150,000.The Investment in Lena had a $160,000 fair value at the end of 2019 and a $140,000 fair value at the end of 2020. Which of the following statements is incorrect? A)The net $10,000 unrealized loss on the investment is reported on Rye's balance sheet as a component of other comprehensive income. B)The 2020 unrealized loss is $20,000,and is included in Rye's 2020 net income. C)The investment is reported at $140,000 on the December 31,2020 balance sheet. D)The 2019 unrealized gain is $10,000 and is included in Rye's 2019 net income.

Related questions
Q 57
Rye Company purchased 15% of Lena Company's common stock during 2019 for $150,000.The Investment in Lena had a $160,000 fair value at the end of 2019 and a $140,000 fair value at the end of 2020.Lena Company declared and paid dividends of $36,000 in 2019 and $38,000 in 2020.What is the total amount reported on Rye's income statement for the year ended December 31,2020 related to the Lena investment? A)$15,700. B)($14,300). C)($15,700). D)$5,700.
Q 58
Rye Company purchased 25% of Lena Company's common stock during 2019 for $150,000.The Investment in Lena had a $160,000 fair value at the end of 2019 and a $140,000 fair value at the end of 2020.Lena Company reported net income of $60,000 in 2019 and $72,000 in 2020 and declared and paid dividends of $30,000 each year.On Rye Company's balance sheet at December 31,2020,what amount was reported for the investment in Lena Company? A)$168,000. B)$175,000. C)$160,500. D)$150,500.
Q 59
When is the equity method used to account for long-term investments in common stock? A)When the investment is between 20% and 50% of the voting stock,regardless of whether or not significant influence can be achieved. B)When the investment is greater than 50% of the voting stock,regardless of whether or not significant influence can be achieved. C)When the investment is greater than 50% of the voting stock and significant influence can be achieved. D)When the investment is between 20% and 50% of the voting stock and significant influence can be achieved.
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