Which of the Following Is True About a Passive Investment

question 16

Multiple Choice

Which of the following is true about a passive investment in common stock?

• A)The investing company usually owns less than 20% of the voting stock in the affiliate and the investment is reported on the balance sheet at cost.
• B)The investment must not have any voting rights.
• C)The fair value method requires unrealized gains and losses to be recognized in the stockholders' equity section of the balance sheet.
• D)The investing company usually owns less than 20% of the voting stock in the affiliate and the investment must be reported at fair value on the balance sheet.

---

Definitions:

Workingman's Parties

Political organizations formed in the 19th century advocating for the rights and interests of working-class individuals.

Strikes

Work stoppages initiated by employees as a form of protest, typically aimed at securing better wages, hours, or working conditions.

Market Revolution

A significant shift in the 19th century, where manual labor and trade transitioned towards a more market-oriented and industrial economy.

Separation of Classes

The division of society into distinct social classes, characterized by differences in wealth, occupation, and social status, which can lead to inequality and limited social mobility.