Use of the Consolidated Financial Statement Method of Accounting for a Long-Term

question 39

Multiple Choice

Use of the consolidated financial statement method of accounting for a long-term investment in common stock of another company is required when the ownership of its voting stock is

• A)20% or more.
• B)less than 20%.
• C)between 20% and 50%.
• D)more than 50%.

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Definitions:

Shares "Owed"

Likely incorrect or a misunderstanding; potentially refers to shares that are borrowed and need to be returned in transactions such as short selling (NO real key term).

Cash Dividend

This is a payment made by a company out of its earnings to its shareholders, usually in the form of cash.

Earnings

The amount of profit that a company generates during a specific period, which can be used to measure the company's financial health and profitability.

Stockholders

Individuals or entities that own shares of stock in a corporation, having ownership interest in the company.