The Wellness Society,a Not-For-Profit Organization,owns 25% of the Shares of the Fitness

question 15

Multiple Choice

The Wellness Society,a not-for-profit organization,owns 25% of the shares of the Fitness Factory,a for-profit organization.Three of the ten-person board of directors of the Fitness Factory are also directors of the Wellness Society.How should the Wellness Society account for its investment in the Fitness Factory?

• A)Consolidation
• B)The equity method
• C)The cost method
• D)Note disclosure only

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Definitions:

Public Corporations

Entities established by a government to undertake commercial activities on behalf of the government.

Nonprofit Corporations

are legal entities organized for purposes other than generating profit, where surplus revenues are reinvested in the entity's mission rather than distributed to shareholders.

Articles of Incorporation

The document filed with a governmental body to legally document the creation of a corporation, outlining its structure, purpose, and regulations.

Authorized Shares

The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation.