If an Investor Company Buys the Majority of the Voting

question 54

Multiple Choice

If an investor company buys the majority of the voting shares of an investee company what is the effect on the investee's accounting records?

• A)The assets and liabilities are re-valued to fair market value.
• B)The assets and liabilities are re-valued to the investor's cost.
• C)The transaction is recorded at the investee's historical cost.
• D)There is no effect on the investee's accounting records.

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Definitions:

Globalization

The process of increased interconnectedness among countries, primarily in economics, politics, and culture, due to advances in communication and transportation.

International Trade

The exchange of goods, services, and capital between countries, driven by a desire for economic benefit and efficiency.

Economic Changes

Refers to shifts in the structure, performance, or organization of an economy, including changes in market conditions, regulatory environments, and the distribution of wealth and resources.

CSR

Corporate Social Responsibility; a business model in which companies integrate social and environmental concerns in their operations and interactions with stakeholders.