If a Company Owns 49% of the Stock of Another

question 19

True/False

If a company owns 49% of the stock of another business, cash dividends received from the investee company are generally recorded by decreasing the value of the Investment account.

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Definitions:

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to repay according to the agreed terms.

Enforceable Security Interest

A legal claim or lien on collateral that secures the fulfillment of a debt or obligation, which can be enforced in court.

Escrow

A financial arrangement where a third-party holds and regulates payment of the funds required for two parties involved in a given transaction, ensuring fair and secure dealing.

Collateral

An asset offered as security for a loan, which can be seized by the lender if the borrower defaults on the loan payments.