You Are Auditing a Company That Owns Twenty Percent of the Voting

question 61

Essay

You are auditing a company that owns twenty percent of the voting common stock of another corporation and uses the equity method to account for the investment. How would you verify that the equity method is appropriate in this case?

---

Definitions:

Parkinson Disease

Parkinson disease is a degenerative neurological disorder characterized by motor symptoms such as tremors, stiffness, and slowness of movement due to the loss of dopamine-producing brain cells.

Multiple Sclerosis

A chronic autoimmune disease where the immune system attacks the protective covering of the nerves, leading to impaired brain and spinal cord function.

Major Depression

Mood disorder characterized by prolonged feelings of worthlessness and guilt, disruption of normal eating habits, insomnia, a general slowing of behavior, and frequent thoughts of suicide.

Concordance Rate

The likelihood of two individuals sharing a trait or disorder, often used in twin studies to explore genetic vs. environmental influences.