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.

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Definitions:

Operant Behavior

A behavior that is influenced by the consequences that follow it, such as rewards or punishments, based on the principles of operant conditioning.

Associative Learning

The process by which an association between two stimuli or a behavior and a stimulus is learned.

Classical

Often referring to traditions or styles established over a long period in literature, music, art, or architecture, emphasizing qualities of balance, harmony, and restraint.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, where an association is made between a behavior and a consequence for that behavior.