If a Company Owns More Than 20% of the Stock

question 146

Multiple Choice

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?

• A)Equity method
• B)Market value method
• C)Historical cost method
• D)Straight-line method
• E)Effective method

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Definitions:

Goal-Setting Process

A motivational technique involving the establishment of achievable, specific, and measurable objectives to enhance performance and focus.

Employees

Individuals who are hired to perform services or work for an organization or employer, typically in return for compensation.

Dual Factor Theory

Dual Factor Theory, also known as Herzberg's motivation-hygiene theory, proposes that job satisfaction and dissatisfaction arise from two separate sets of factors—motivation factors that lead to job satisfaction and hygiene factors that prevent dissatisfaction.

Hygiene Factors

According to Herzberg's two-factor theory, aspects of the work environment that can cause dissatisfaction if missing, such as salary, company policies, and working conditions, but do not necessarily motivate when improved.