If a Company Owns More Than 20% of the Shares

question 99

Multiple Choice

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

• A) Equity method.
• B) Fair value method.
• C) Historical cost method.
• D) Cost with amortization method.
• E) Effective method.

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Definitions:

Oval Window

A membrane-covered opening that separates the middle ear from the inner ear and transmits sound vibrations from the ossicles to the cochlea.

Vestibular Sacs

Structures in the inner ear that are responsible for sensing gravity and linear acceleration, helping to maintain balance and spatial orientation.

Olfactory Receptors

Specialized nerve cells in the nose responsible for detecting odors in the environment and conveying the information to the brain.

Odorant Molecules

Chemical particles that are detected by sensory receptors in the nose, leading to the perception of smells.