If One Company Owns More Than 50% of the Common

question 10

Multiple Choice

If one company owns more than 50% of the common shares of another company

• A)the cost method should be used to account for the investment.
• B)a partnership exists.
• C)a parent-subsidiary relationship exists.
• D)the company whose shares are owned must be liquidated.

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Definitions:

Rule Of Reason

The rule stated and applied in the U.S. Steel case that only combinations and contracts unreasonably restraining trade are subject to actions under the antitrust laws and that size and possession of monopoly power are not by themselves illegal. Compare with per se violation.

Antitrust Applications

Legal measures and actions taken to prevent or reduce anti-competitive practices, ensuring fair competition in the market.

Monopoly Power

Monopoly power refers to the ability of a monopoly (a single supplier of a product or service) to dictate terms and prices to its favor because no competition exists.

Unfair Advertising

Marketing practices that mislead or deceive the consumers, creating a false impression of the product or service.