The Equity Method of Accounting for an Investment in the Ordinary

question 218

Multiple Choice

The equity method of accounting for an investment in the ordinary shares of another company should be used by the investor when the investment

• A) is composed of ordinary shares and it is the investor's intent to vote the ordinary shares.
• B) ensures a source of supply of raw materials for the investor.
• C) enables the investor to exercise significant influence over the investee.
• D) is obtained by an exchange of shares for shares.

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Definitions:

Nonlinear

A term describing the relationship between variables where the effect of changing one variable on another is not constant; it does not follow a straight line.

Spread

The difference between the highest and lowest values in a data set, indicating the variability.

Taxi Ride

A transportation service where a passenger is transported via a taxi from one location to another for a fee.

Correlation

Correlation is a statistical measure that describes the extent to which two or more variables fluctuate together, indicating the strength and direction of their relationship.