Which of the Following Is True About Passive Investments

question 19

Multiple Choice

Which of the following is true about passive investments?

• A) These investments must not have any voting rights.
• B) The investing company must usually own less than 20% of the voting stock in the investee and these investments must be reported at market value on the balance sheet even though the historical cost principal is violated.
• C) The investing company usually owns less than 20% of the voting stock in the investee and they are reported on the balance sheet at cost.
• D) The market value method requires realized gains and losses to be recognized on the income.

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Definitions:

SARA

An acronym standing for the Species at Risk Act, a Canadian law enacted to provide for the recovery of wildlife species that are at risk of extinction.

Captive Breeding

A conservation strategy involving the breeding of endangered species in controlled environments, such as wildlife reserves or zoos, with the aim of reintroducing them to their natural habitats.

Extinction Spasm

Extinction Spasm is a rapid increase in the rate of extinction experienced by species within a relatively short geological period, often due to human activities.

Eco-Catastrophe

A major ecological disaster or event that causes significant harm to the environment and living organisms.