If 10% of the Common Stock of an Investee Company

question 58

Multiple Choice

If 10% of the common stock of an investee company is purchased as an investment, the appropriate method of accounting for the investment is

• A) the cost method.
• B) the equity method.
• C) the preparation of consolidated financial statements.
• D) determined by agreement with whomever owns the remaining 90% of the stock.

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Definitions:

Cuboidal Epithelial

Cuboidal epithelial cells are cube-shaped cells that make up the epithelium, functioning in secretion and absorption, found in many glands and ducts.

Myosin

A type of protein found in muscle fibers that acts with actin in muscle contraction and movement.

Ribose

A pentose sugar that is a crucial component of RNA (ribonucleic acid).

Glial Cells

In nervous tissue, cells that support and nourish neurons; they also communicate with neurons and have several other functions; also see astrocyte, oligodendrocyte, ependymal cells, and microglia