Randy Company Acquired 40% of the Voting Stock of Biel

question 61

Multiple Choice

Randy Company acquired 40% of the voting stock of Biel Company for $40 million.At the end of Year 1,Biel Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Randy Company's investment in Biel Company is $44 million.The ________ method should be used by Randy Company to account for the investment.

• A) market-value
• B) consolidated
• C) cost
• D) equity

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Definitions:

Catharsis

Expression of emotions connected to memories and conflicts, which, according to Freud, leads to the release of energy used to keep these memories in the unconscious.

Dysfunctional Global Assumption

Negative beliefs held by an individual about themselves or the world, affecting their cognition and behavior.

Cognitive-Behavioral Therapy

A psychotherapeutic treatment that helps patients understand the thoughts and feelings that influence behaviors, commonly used to treat a wide range of disorders, including phobias, addiction, depression, and anxiety.

Systematic Desensitization

A therapeutic technique aimed at reducing anxiety by gradually exposing the patient to the anxiety-provoking stimulus.