When a Public Company Holds Between 20% and 50% of the Outstanding

question 31

Multiple Choice

When a public company holds between 20% and 50% of the outstanding common shares of an investee, which of the following statements applies?

• A) The investor should always use the equity method to account for its investment.
• B) The investor should use the equity method to account for its investment unless circumstances indicate that it is unable to exercise "significant influence" over the investee.
• C) The investor must use the cost method unless it can clearly demonstrate the ability to exercise "significant influence" over the investee.
• D) The investor should always use the cost method to account for its investment.

---

Definitions:

Powhatan

Refers to a Native American people in Virginia at the time of British colonization, also the name of their leader who interacted with the English settlers at Jamestown.

Trade

The exchange of goods, services, or both within and between countries, driven by the principle of comparative advantage and market demand.

Indentured Servants

Individuals who signed a contract to work for a specific period of time in exchange for passage to the New World, food, accommodation, and a form of 'freedom dues' at the end of their term.

Women In Virginia

A term referring to the life, roles, and historical contributions of women in the state of Virginia, highlighting their social, political, and economic experiences.