Which of the Following Is True About a Passive Investment

question 106

Multiple Choice

Which of the following is true about a passive investment in common stock?

• A)The investing company usually owns less than 20% of the voting stock in the affiliate and the investment is reported on the balance sheet at cost.
• B)The investment must not have any voting rights.
• C)The fair value method requires unrealized gains and losses to be recognized on the income statement.
• D)The investing company usually owns less than 20% of the voting stock in the affiliate and the investment must be reported at fair value on the balance sheet.

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Definitions:

Comfort Effects

Refers to the impact of physical and psychological comfort on an individual's well-being and productivity in various environments, including the workplace.

Workplace Injury

Any harm, ranging from minor to severe, that occurs to an individual in the course of performing job-related duties.

Lack Internal Expertise

The situation in which an organization does not possess the necessary specialized knowledge or skills internally, often leading to the outsourcing of these functions.

Outsource

The practice of contracting with an external party to perform services or create goods that were traditionally done by internal staff or resources.