If 10% of the Common Stock of an Investee Company

question 58

Multiple Choice

If 10% of the common stock of an investee company is purchased as an investment, the appropriate method of accounting for the investment is

• A) the cost method.
• B) the equity method.
• C) the preparation of consolidated financial statements.
• D) determined by agreement with whomever owns the remaining 90% of the stock.

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Definitions:

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Archie Carroll

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Guidelines or standards used to make choices that reflect moral and ethical values and integrity.