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?

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Definitions:

Obsessive-Compulsive

Relating to a disorder characterized by intrusive thoughts (obsessions) that produce uneasiness and repetitive behaviors (compulsions) aimed at reducing the anxiety.

Delusional

Relating to or characterized by delusions, which are persistent false beliefs maintained despite evidence to the contrary, often symptomatic of psychiatric disorders.

Post-Traumatic Stress

A disorder characterized by failure to recover after experiencing or witnessing a terrifying event.

Specific Phobia

A type of anxiety disorder characterized by an extreme and irrational fear of a specific object, situation, or activity.