The Cost Method of Accounting for Long-Term Investments in Stock

question 118

Multiple Choice

The cost method of accounting for long-term investments in stock should be employed when the

• A) investor owns more than 50% of the investee's stock.
• B) investor has significant influence on the investee and the stock held by the investor are marketable equity securities.
• C) market value of the shares held is greater than their historical cost.
• D) investor's influence on the investee is insignificant.

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Definitions:

Grapevine

Informal communication network within an organization, known for spreading rumors and unofficial information rapidly.

Text Messaging

The act of sending short, digital messages between mobile devices over a network.

Oral Communication

The process of verbally transmitting information and ideas from one individual or group to another.

Visual Literacy

The ability to interpret, negotiate, and make meaning from information presented in the form of images, extending the meaning of literacy beyond just words.