When One Corporation Has a Controlling Interest in Another Corporation

question 3

Multiple Choice

When one corporation has a controlling interest in another corporation whose shares are not actively traded, under ASPE, the investment is accounted for using

• A) either the consolidation method or the equity method or the cost method.
• B) the consolidation method.
• C) either the consolidation method or the equity method.
• D) either the consolidation method or the equity method or the cost method or the FV-OCI method.

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Definitions:

Current Stock Price

The most recent price at which a stock was traded on a public exchange.

Required Return

The minimum rate of return on an investment deemed acceptable to an investor, considering its risk level.

Dividends

Disbursements issued by a company to its stockholders, usually originating from the firm's earnings.

Price of The Stock

The current market value at which a single share of a company's stock can be bought or sold.