Gumble Ltd

question 2

Multiple Choice

Gumble Ltd. has owned 65% of the common shares of Lopez for several years. This year, Gumble reduced its interest in Lopez to 10%. Which of the following statements is true?

• A)Gumble must change from reporting under consolidation to the equity method.
• B)Gumble must change from reporting under consolidation to the cost method.
• C)Gumble must change from reporting under the equity method to the cost method.
• D)Gumble is not required to change its reporting method.

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Definitions:

Specific Companies

Refers to individual firms or corporations identified by their unique characteristics, operations, or market activities.

Market Risk

The risk of losses in investments caused by factors affecting the entire market or economy, such as recessions or political instability.

Probability Distribution

A statistical model that demonstrates all possible values and their likelihoods for a random variable across a certain range.

Market Risk

The potential for investors to experience losses due to factors that affect the overall performance of the financial markets, such as economic downturns or fluctuations in interest rates.