Match the Following Terms to Their Correct Definition

question 111

Multiple Choice

Match the following terms to their correct definition:
-Name given to an investor who owns over 50% of the outstanding common stock of the investee

• A)equity security
• B)debt security
• C)passive
• D)significant influence
• E)control
• F)parent
• G)subsidiary
• H)trading securities
• I)available-for-sale securities
• J)held-to-maturity securities
• K)amortized cost method
• L)fair value method
• M)unrealized gains and losses
• N)equity method
• O)consolidation worksheet
• P)minority interest
• Q)business combination
• R)goodwill

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Definitions:

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, reflecting the decrease in value due to wear, tear, or obsolescence.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is accounted for initially at cost and adjusted thereafter for the post-acquisition change in the investor's share of the investee's net assets.

Joint Venture Investment

A joint venture investment is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.

Acquisition Differential

The difference between the purchase price of an acquired company and the fair value of its identifiable tangible and intangible assets.