Which of the Following Is True About Passive Investments

question 82

Multiple Choice

Which of the following is true about passive investments?

• A)The investing company usually owns less than 20% of the voting stock in the investee and they are reported on the balance sheet at cost.
• B)These investments must not have any voting rights.
• C)The market value method requires realized gains and losses to be recognized on the income.
• D)The investing company must usually own less than 20% of the voting stock in the investee and these investments must be reported at market value on the balance sheet even though the historical cost principal is violated.

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Definitions:

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