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:

Psychosocial Development

A theory proposed by Erik Erikson that describes how individuals evolve through various stages of social and psychological development from infancy to adulthood.

Erikson

Refers to Erik Erikson, a developmental psychologist known for his theory on the psychosocial development of human beings.

Industry Versus Inferiority

A stage in Erik Erikson's theory of psychosocial development where children develop a sense of competence through mastering tasks.

Psychosocial Stages

A theory proposed by Erik Erikson, which posits that individuals go through eight developmental stages, each involving a specific conflict that must be resolved.