When a Corporation Owns More Than 50 Percent of the Voting

question 26

Multiple Choice

When a corporation owns more than 50 percent of the voting stock in another corporation,it usually should report its investment by using (the)

• A)equity method.
• B)cost adjusted to market method.
• C)book value method.
• D)consolidated financial statements.

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Definitions:

Value-Added Costs

Expenses incurred by a company that increase the worth of a product or service to a customer, thereby enhancing the product's or service's selling price.

Non-Value-Added Costs

Expenses that do not contribute to adding value or increasing the worth of a product or service from a customer's perspective.

Conversion Costs

The combined costs of direct labor and manufacturing overhead incurred to convert raw materials into finished goods.

Machine Hours

A measure of production output or activity based on the number of hours machinery is in operation, used in cost accounting to allocate expenses to products.