Which of the Following Is a Condition to Record an Investment

question 70

Multiple Choice

Which of the following is a condition to record an investment as an available-for-sale security?

• A)There should not be any annual cash flows from the investment.
• B)It should have a maturity of less than two years.
• C)It should be a debt security.
• D)The ownership in the voting stock of the investee should be less than 20%.

---

Definitions:

Inventory

The goods or materials a business holds for the ultimate purpose of resale or processing in the production process.

Invest

Putting money into ventures with the expectation of receiving a financial return or profit.

Investment Project

A project involving the allocation of capital or resources towards an initiative expected to generate future income or profit over a certain period of time.

Interest

The charge for borrowing money, typically expressed as an annual percentage of the loan amount, or the return earned on investment capital.