What Method of Accounting Will Generally Be Used When One

question 31

Multiple Choice

What method of accounting will generally be used when one company purchases between 20% to 50% of the outstanding stock of another company?

• A)Only the fair value method may be used.
• B)Only the equity method may be used.
• C)Either the fair value method or the equity method may be used,depending upon the relationship between the companies.
• D)Neither the fair value method nor the equity method may be used,regardless of the level of ownership.

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Definitions:

Corn Prices

The cost at which corn is bought or sold, which can fluctuate based on factors like supply, demand, and market conditions.

Supply and Demand Curves

Graphical representations used in economics to show the relationship between the quantity of a good that producers wish to sell at various prices and the quantity that consumers wish to buy.

Decrease in Demand

A reduction in the quantity of a product or service that consumers are willing or able to purchase at a given price.

Quantity Supplied

The amount of a good or service that producers are willing to sell at a given price over a specified period.