The Equity Method of Accounting for Investments in Voting Common

question 24

Multiple Choice

The equity method of accounting for investments in voting common stock is appropriate when:

• A) The investor can significantly influence the investee.
• B) The investor has voting control over the investee.
• C) The investor intends to hold the common stock indefinitely.
• D) The investor is assured of a continued supply of a valuable raw material.

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Definitions:

Anal Stage

A phase in Freudian psychosexual development where a child's focus of pleasure is on controlling bladder and bowel movements, typically occurring between ages 18 months to 3 years.

Psychoanalytic Thought

A body of theories first developed by Sigmund Freud that emphasizes the influence of the unconscious mind on behavior, the importance of childhood experiences, and the roles of conflict between conscious and unconscious forces.

Libido

In psychoanalytic theory, a term used to describe sexual desire or the driving force behind all human behavior according to Freud.

Compromise Formation

In modern psychoanalytic thought, the main job of the ego, which is to find a compromise among the different structures of the mind and the many different things the individual wants all at the same time. What the individual actually thinks and does is the result of this compromise.