When a Company Owns More Than 50% of the Common

question 148

Multiple Choice

When a company owns more than 50% of the common stock of another company

• A) consolidated financial statements are usually prepared.
• B) the cost method of accounting is used.
• C) they are referred to as the subsidiary.
• D) they recognize revenue when dividends are received.

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Definitions:

Impossibility Theorem

A theory stating that no rank-order voting system can meet certain desirable criteria, famously outlined by Kenneth Arrow.

Majority Rule Voting

A decision-making process where policies, leaders, or propositions are decided based on receiving more than half of the total votes cast.

Logrolling

A practice in politics where individuals or parties exchange support for each other's proposals or legislation.

Market Failure

Occurs when resources are misallocated, or allocated inefficiently. The result is waste or lost surplus.