The Wellness Society, a Not-For-Profit Organization, Owns 25% of the Shares

question 14

Multiple Choice

The Wellness Society, a not-for-profit organization, owns 25% of the shares of the Fitness Factory, a for-profit organization. Three of the 10-person board of directors of the Fitness Factory are also directors of the Wellness Society. How should the Wellness Society account for its investment in the Fitness Factory?

• A)Consolidation
• B)The equity method
• C)The cost method
• D)Note disclosure only

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Definitions:

Duty

A legal or moral obligation to act or refrain from acting in a certain manner.

Mediation

A dispute resolution process involving a neutral third party who helps the conflicting parties reach a voluntary, mutually acceptable agreement.

Arbitration

A method of dispute resolution where a neutral third party, called an arbitrator, makes a binding decision to settle a dispute.

Judicial Review

The process by which a court examines the actions of public sector bodies to ensure they are lawful and constitutional.