A Company Should Always Use the Equity Method to Account

question 87

Multiple Choice

A company should always use the equity method to account for an investment if:

• A) It has the ability to exercise significant influence over the operating policies of the investee.
• B) It owns 30% of another company's stock.
• C) It has a controlling interest (more than 50%) of another company's stock.
• D) The investment was made primarily to earn a return on excess cash.
• E) It does not have the ability to exercise significant influence over the operating policies of the investee.

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Definitions:

Special Discount

A unique or exclusive reduction in the price of goods or services, often offered for a limited time or to specific customers.

De-emphasize

To make something less prominent or reduce its emphasis in comparison to other aspects.

Pros and Cons

A list or discussion of the advantages (pros) and disadvantages (cons) of a particular decision or course of action.

Positive Emphasis

Focusing on positive aspects or optimistic views in communication to influence perception or behavior.