When an Investor Owns More Than 50% of the Common

question 50

Multiple Choice

When an investor owns more than 50% of the common shares of another company,

• A)consolidated financial statements are usually prepared.
• B)the fair value through profit or loss model is used.
• C)the investor is called a subsidiary.
• D)the investor recognizes income only when dividends are received.

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Definitions:

Capital Stock

Refers to the total amount of physical goods and financial assets owned by a company that are used in producing goods or services.

Capital Production

The process of creating goods and services through the combination of labor, land, and capital.

Rich and Poor Countries

The classification of countries based on their economic status, with rich countries having high levels of income and wealth and poor countries having significantly lower levels.

Consumer Preferences

The particular goods and services that consumers demand, reflecting their tastes, desires, and needs.