If One Company Owns More Than 50% of the Common

question 110

Multiple Choice

If one company owns more than 50% of the common stock 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 stock is owned must be liquidated.

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Definitions:

Elasticity of Resource Demand

A measure of how much the quantity demanded of a resource changes in response to a change in its price.

Resource Quantity Demanded

Refers to the total quantity of a resource that buyers are willing and able to purchase at a given price over a specific period.

Total Costs

The sum of fixed and variable expenses incurred by a business in the production of goods or services.

Labor Costs

The total sum of all financial compensations and benefits given to employees in exchange for their work, including wages, salaries, and additional perks.