The Cost Method of Accounting for Long-Term Investments in Shares

question 123

Multiple Choice

The cost method of accounting for long-term investments in shares should be employed when the

• A) investor owns more than 50% of the investee's shares.
• B) investor has significant influence on the investee and the shares held by the investor are marketable equity securities.
• C) fair value of the shares held is greater than their historical cost.
• D) investor's influence on the investee is insignificant.

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Definitions:

External Forces

Elements and conditions outside an organization that can affect its performance and strategy, such as market trends and regulatory changes.

External Adaptation

Involves an organization or organism changing in response to its external environment to better survive and thrive.

Measure Accomplishments

The process of assessing the extent to which goals have been achieved or tasks have been completed successfully.

Cultural Differences

Cultural differences are the variations in the customs, values, norms, and practices among people from different societies.