Asked by Brandon Underhill on Jun 21, 2024

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Which of the following items would not affect the investor's income for the period?

A) interest received on a temporary investment in bonds
B) dividends received on a long-term investment in stock where the investor owns 10% of the investee's stock
C) dividends received on a long-term investment in stock where the investor owns 30% of the investee's stock
D) interest received on a long-term investment in bonds

Temporary Investment

Short-term investments made with the intention of converting them into cash within a short period, usually one year or less.

Long-Term Investment

Financial investments that are not expected to be liquidated within a year and are held for growth, income, or speculative purposes.

Investor's Income

The income earned by an investor from their investment portfolio, including dividends, interest, and capital gains.

  • Acquire knowledge on the accounting treatment of dividends and interest revenue within investments.
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CQ
Camila QuirogaJun 26, 2024
Final Answer :
C
Explanation :
Dividends received on a long-term investment in stock where the investor owns 30% of the investee's stock typically imply significant influence over the investee. In such cases, the equity method of accounting is used, where dividends received are treated as a return of investment rather than income, thus not affecting the investor's income for the period.