If a Company Owns More Than 20% of the Stock

question 12

Multiple Choice

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?

• A)Equity method.
• B)Fair value method.
• C)Historical cost method.
• D)Cost with amortization method.
• E)Effective method.

---

Definitions:

Strategic Benefits

Advantages that accrue to an organization through the implementation of strategies that improve competitiveness and ensure the achievement of goals.

Competitive Benefits

Advantages offered by a company to its employees that go beyond the standard benefits package, designed to attract and retain talent by meeting or exceeding what competitors offer.

Financial Benefits

Advantages gained in monetary terms, such as increased revenue, cost savings, or improved profit margins.

Tax Advantages

Financial benefits derived from tax laws, such as deductions or credits, which reduce the tax liability for individuals or businesses.