If One Company Owns More Than 50% of the Common

question 119

Multiple Choice

If one company owns more than 50% of the common stock of another company

• A) a partnership exists
• B) a parent-subsidiary relationship exists
• C) the company whose stock is owned must be liquidated
• D) the fair value method should be used to account for the investment

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Definitions:

Diffusion

The process by which molecules move from an area of higher concentration to an area of lower concentration.

Passive Transport

involves the movement of substances across cell membranes without the need for energy input.

Osmosis

The spontaneous movement of solvent molecules through a semi-permeable membrane from a region of lower solute concentration to a region of higher solute concentration.

Salt Water

Water that contains a high concentration of dissolved salts, commonly found in the oceans.