When a Company Has Acquired a "Passive Interest" in Another

question 54

Multiple Choice

When a company has acquired a "passive interest" in another corporation, the acquiring company should account for the investment

• A) by using the equity method.
• B) by using the fair value method.
• C) by using the effective interest method.
• D) by consolidation.

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Definitions:

Routine Inquiry

A regular or standardized request for information, often part of everyday business or research practices.

Buffer

A temporary storage area or protective barrier that mitigates the impact of changes or differences between systems or entities.

Persuasive Opening

The initial part of a communication intended to capture attention and influence the audience's attitude or behavior positively towards a particular argument or viewpoint.

Routine Message

A type of communication that deals with day-to-day operations and transactions, often procedural.