If a Company Owns More Than 20% of the Stock

question 121

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

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Definitions:

Common Objects

Items that are familiar or regularly found in a given context or environment, easily recognizable by most people.

Private Speech

Self-directed speech or internal dialogue that individuals, especially children, use to guide their actions and thoughts.

Competent

Having the necessary ability, knowledge, or skill to do something successfully.

Language Development

The process by which children come to understand and communicate language during early childhood.