The Equity Method Should Generally Be Used to Account for an Investment

question 98

Multiple Choice

The equity method should generally be used to account for an investment in stock when the level of ownership is

• A) less than 10%.
• B) between 10% and 20%.
• C) between 20% and 50%.
• D) 10% or more.

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Definitions:

Thrift Institutions

Savings and loan associations, mutual savings banks, and credit unions, primarily engaged in accepting savings deposits and making mortgage and other loans.

Government Securities

Financial instruments issued by the government to finance its expenditures, promising to pay back with interest.

Excess Reserves

Capital reserves held by banks that surpass the minimum reserve requirements, providing liquidity and stability to the banking system.

Money Supply

The total quantity of monetary assets available in an economy at a specific time, including notes, coins, and balances held in checking and savings accounts.