Which of the following is true concerning the accounting for a foreign investment under the cost method?
A)Investment income is translated at the exchange rate on the dividend declaration date.
B)Investment income is translated using the average exchange rate for the year.
C)Investment income is based on the investee's net income adjusted for the excess of purchase price over book value.
D)Investment income is based on the investee's net income without adjusting for the excess of purchase price over book value.

Question

Which of the following is true concerning the accounting for a foreign investment under the cost method?
A)Investment income is translated at the exchange rate on the dividend declaration date.
B)​Investment income is translated using the average exchange rate for the year.
C)​Investment income is based on the investee's net income adjusted for the excess of purchase price over book value.
D)​Investment income is based on the investee's net income without adjusting for the excess of purchase price over book value.

Quizplus · Accepted Answer

Under the cost method, investment income is recognized when dividends are declared by the investee, and these dividends are translated at the exchange rate on the dividend declaration date.

Which of the Following Is True Concerning the Accounting for a Foreign