If a Company Acquires a 40% Interest in Another Company

question 64

Multiple Choice

If a company acquires a 40% interest in another company

• A)the equity method is usually applicable.
• B)it would always have a controlling interest.
• C)one of the fair value models is usually applicable.
• D)the investor does not have the ability to exert significant influence over the investee.

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Definitions:

Sick

A condition of being unwell either in body or mind.

Logical Strength

The degree to which the premises of an argument support its conclusion, ranging from absolute certainty to varying levels of probability.

Deductive

Pertains to a logical process in which a conclusion follows necessarily from the stated premises, implying the conclusion is a direct consequence of the premises.

Inductive

A reasoning method that makes broad generalizations from specific observations.