Settlements in Liability Cases Occur Only When

question 76

Multiple Choice

Settlements in liability cases occur only when:

• A)the insurer issues a declaratory judgment.
• B)the third party gives up the legal right to litigate.
• C)the third party demands prelitigation payment.
• D)the third party institutes litigation.

---

Definitions:

Equity Method

This accounting approach is applied when an investor holds significant control over an investee, indicating a substantial interest but not full control or majority stake.

Consolidation Entries

Accounting entries used in preparing consolidated financial statements that eliminate transactions between the parent company and its subsidiaries.

Control Premium

An additional amount that a buyer is willing to pay over the current market value of a company to obtain controlling interest.

Consolidate

To combine assets, liabilities, and other financial items of two or more entities into one.