If an Investor Owns Less Than 20% of the Common

question 16

Multiple Choice

If an investor owns less than 20% of the common stock of another company as a long-term investment:

• A)the equity method of accounting should be used for the investment.
• B)the investor has a controlling interest in the investee.
• C)the investor usually has little or no influence on the investee.
• D)the investor has significant influence on the investee.

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Definitions:

Planetary Motion

The movement of planets around a star, such as the orbit of Earth and other planets around the Sun.

Proxy Variable

An auxiliary variable used in statistical analyses to represent an unobservable or difficult-to-measure variable.

Confounding Variable

A variable that influences both the dependent variable and independent variable, causing a spurious association.

Cleanliness

The state of being free from dirt, pollutants, or other unwanted substances.