An Investor Should Always Use the Equity Method to Account

question 19

Multiple Choice

An investor should always use the equity method to account for an investment if:

• A) It has the ability to exercise significant influence over the operating policies of the investee.
• B) It owns 30% of an investee's stock.
• C) It has a controlling interest (more than 50%) of an investee's stock.
• D) The investment was made primarily to earn a return on excess cash.
• E) It does not have the ability to exercise significant influence over the operating policies of the investee.

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Definitions:

Nervous System

A collection of neurons and their interconnected fibers responsible for sending nerve messages across the body, integrating physical activities and sensory inputs.

Hormones

Chemical substances produced in the body that regulate the activity of cells or organs.

Psychologists

Professionals who study mental processes and behavior in humans and animals.

Neurotransmitters

Chemical messengers that transmit signals across a chemical synapse, from one neuron (nerve cell) to another target neuron, muscle cell, or gland cell.