When a Company Holds Between 20% and 50% of the Outstanding

question 13

Multiple Choice

When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following statements applies?

• A) The investor must use the fair value method unless it can clearly demonstrate the ability to exercise "significant influence" over the investee
• B) The investor should always use the equity method to account for its investment
• C) The investor should use the equity method to account for its investment unless circumstances indicate that it is unable to exercise "significant influence" over the investee
• D) The investor should always use the fair value method to account for its investment

---

Definitions:

Cocaine

A powerful stimulant drug derived from the leaves of the coca plant, primarily used recreationally for its psychoactive effects.

Amphetamine

A powerful stimulant used to treat conditions like ADHD by increasing attention and reducing impulsiveness and hyperactivity.

Ephedrine

A medication and stimulant used to prevent low blood pressure during spinal anesthesia and treat narcolepsy, obesity, and asthma.

Marijuana

A psychoactive drug derived from the Cannabis plant, used for medical or recreational purposes, known to affect mood, perception, and cognition.