If an Investor Owns Less Than 20% of the Common

question 16

Multiple Choice

If an investor owns less than 20% of the common stock of another company as a long-term investment:

• A)the equity method of accounting should be used for the investment.
• B)the investor has a controlling interest in the investee.
• C)the investor usually has little or no influence on the investee.
• D)the investor has significant influence on the investee.

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Definitions:

MAN

A Metropolitan Area Network; a network that spans a physical area larger than a LAN but smaller than a WAN, used to connect users in a geographic region.

WAN

Wide Area Network, a telecommunications network that extends over a large geographic area for the primary purpose of computer networking.

MAN

Metropolitan Area Network; a network that interconnects users with computer resources in a geographic area or region larger than that covered by a large local area network (LAN) but smaller than the area covered by a wide area network (WAN).

LAN

Local Area Network, a network that connects computers within a limited area like a home, school, or office building.