Gumble Ltd

question 3

Multiple Choice

Gumble Ltd.has owned 65% of the common shares of Lopez for several years.This year,Gumble reduced its interest in Lopez to 10%.Which of the following statements is true?

• A)Gumble must change from reporting under consolidation to the equity method.
• B)Gumble must change from reporting under consolidation to the cost method.
• C)Gumbel must change from reporting under the equity method to the cost method.
• D)Gumble is not required to change its reporting method.

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Definitions:

Bailee's Lien

A right that allows a bailee (a person who temporarily holds property for another) to retain possession of the property until payment is made.

Right To Sell

The legal authority granted to an individual or entity to sell a particular product, property, or service.

Bailor

An individual or entity that entrusts possession of goods or property to another (the bailee) under an agreement.

Bailment

A legal relationship in common law where physical possession of personal property, or a chattel, is transferred from one person to another who subsequently has possession of the property.