The Ability of an Investing Company to Affect the Operating

question 47

Multiple Choice

The ability of an investing company to affect the operating and financial activities of another company, even though the investor holds less than 50% of the stock, is known as

• A) significant influence.
• B) control.
• C) a combination.
• D) influence and control.

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Definitions:

Foreign Currency Nonmonetary Assets

Assets that are not in cash and are not expected to be converted into cash in the near future, valued in a currency other than the entity's functional currency.

Historic Rate

The exchange rate at which a transaction was executed in the past, used for recording foreign currency transactions in financial statements.

Non-Free-Standing Subsidiaries

Entities that are significantly controlled or wholly owned by another firm but lack the independent structure or operations typically associated with subsidiary companies.

Held-to-Maturity Debt Securities

Financial instruments such as bonds that a company intends and is able to hold until they mature, rather than trading them.