When One Corporation Has a Controlling Interest in Another Corporation

question 3

Multiple Choice

When one corporation has a controlling interest in another corporation whose shares are not actively traded, under ASPE, the investment is accounted for using

• A) either the consolidation method or the equity method or the cost method.
• B) the consolidation method.
• C) either the consolidation method or the equity method.
• D) either the consolidation method or the equity method or the cost method or the FV-OCI method.

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Definitions:

Interest Revenue

This refers to the income that is earned from investments, loans, or savings accounts, essentially any source that pays interest.

Noninterest-Bearing Note

A promissory note that does not accrue interest over its lifetime, meaning the borrower repays only the principal amount.

Current Interest Rates

Current interest rates are the rates at which interest is paid by borrowers for the use of money that they borrow from lenders.

Notes Receivable Dishonored

A note that was not paid by the maker at its due date, considered a defaulted payment.