On january 1, 2018, abc company acquired all of the common stock of xyz company for its underlying book value of $500,000. abc accounts for its investment in xyz using the equity method. information about the two companies as of the date of combination and for the years 2018 and 2019 is as follows. the entry to eliminate abc’s intercorporate ownership claim and xyz’s stockholders’ equity accounts as of the beginning of the period would include:

With signals from no-claim bonuses and deductibles, a. the marginal cost curve for careful drivers lies to the left of the marginal cost curve for aggressive drivers b. auto insurance companies insure more aggressive drivers than careful drivers because aggressive drivers have a greater need for the insurance c. the market for car insurance has a separating equilibrium, and the market is efficient d. most drivers pay higher premiums than if the market had no signals