If 15% of the Common Stock of an Investee Company

question 115

Multiple Choice

If 15% of the common stock of an investee company is purchased as a long-term investment, the appropriate method of accounting for the investment is:

• A)the equity method.
• B)the consolidation method.
• C)the available-for-sale (fair value)method.
• D)the lower of cost or market method.

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Definitions:

Somatotrophic

Pertaining to or promoting somatic growth, often referred to in context with growth hormone that stimulates growth, cell reproduction, and cell regeneration.

Troph

A suffix indicating growth, development, or nourishment, often used in biological contexts.

Transverse Plane

An imaginary plane that divides the body into upper and lower parts.

Transverse

Refers to lying or extending across something; perpendicular to the long axis.