If a Company Acquires a 40% Common Stock Interest in Another

question 137

Multiple Choice

If a company acquires a 40% common stock interest in another company

• A) the equity method is usually applicable.
• B) all influence is classified as controlling.
• C) the cost method is usually applicable.
• D) the ability to exert significant influence over the activities of the investee does not exist.

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Definitions:

Goods Exports

The act of selling and shipping goods from one country to another country.

Net Investment Income

The total income received from investment assets, after deducting all related expenses.

Assets Abroad

Financial or physical holdings owned by individuals or entities in countries other than their own.

Current Account Balance

A measure of a country's trade, earnings on foreign investments minus payments to foreign investors, and cash transfers, over a period.