When an Enterprise Increases Its Interest in an Investment in Equity

question 66

Multiple Choice

When an enterprise increases its interest in an investment in equity securities accounted for by the fair value method,and changes to the equity method,what is the initial carrying value for purposes of subsequent application of the equity method?

• A) Book value at the date of the change
• B) Original cost plus or minus the net market value change since acquisition
• C) Market value at the date of the change
• D) The amount that would be reflected in the investment account had the equity method been in use continually since the purchase of the securities

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Definitions:

Key

An essential element or a device used to open locks, regarded metaphorically as a crucial component or part of a larger system.

Political Risk

The potential for losses or other negative impacts to a business resulting from political changes or instability within a country.

Governmental Attitudes

The stance or policy approach adopted by a government towards a particular issue or sector.

Bureaucratic Risk

involves the uncertainties and slowdowns that can occur within an organization due to rigid procedures, policies, and hierarchies.