If 15% of the Common Stock of an Investee Company

question 107

Multiple Choice

If 15% of the common stock of an investee company is purchased as a long-term investment, the appropriate method of accounting for the investment is:

• A) the available-for-sale method (Market value method).
• B) the equity method.
• C) the preparation of the consolidated financial statements.
• D) agreed upon with owners of the remaining 90% of stock.

---

Definitions:

Premium Item

A premium item is a product or service offered at a higher quality and price point, often perceived as being of higher value than standard offerings.

Price-insensitive Product

Products for which demand remains relatively constant regardless of changes in price, often due to unique attributes or lack of substitutes.

Product-line Pricing

A marketing strategy where a company sets different price points for various products in the same product line based on features, materials, or other value points to target different consumer segments.

Product-line Pricing

A marketing strategy that involves setting different prices for various items in a product line based on their features, costs, or market demand.