A Company That Owns 40% of the Common Stock of Another

question 170

Multiple Choice

A company that owns 40% of the common stock of another business recognizes revenue from the investment when:

• A) the company sells the shares in the investee company.
• B) the investee issues a cash dividend.
• C) the investee recognizes net income.
• D) the investee issues a stock dividend.

---

Definitions:

Fraudulently Misrepresentation

An intentionally false representation of fact made by one party to another, with the intent to deceive and for the purpose of inducing the other party to act or refrain from acting in reliance on it.

Rescind

The legal act of canceling, revoking, or annulling a contract or agreement, effectively bringing it to an end.

Damages

Monetary compensation awarded by a court to a person who has suffered loss or harm as a result of another's action or inaction.

Statutory Amount

A specific sum of money that is prescribed by statute or law for various purposes.