The Equity Method Generally Should Be Used to Account for an Investment

question 21

Multiple Choice

The equity method generally should be used to account for an investment in stock when the level of ownership is

• A)between 20 and 50 percent.
• B)10 percent or more.
• C)less than 20 percent.
• D)between 10 and 40 percent.

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Definitions:

Breach of Warranty

A legal term referring to the failure to fulfill the terms of a promise or guarantee made in a warranty.

Seller's Promise

A commitment by the seller to the buyer that certain conditions, such as the quality or delivery of a product, will be fulfilled.

Duty on the Seller

The responsibility of the seller to deliver goods that meet the criteria specified in a sales contract, including aspects like quality, quantity, and timelines.

Implied Warranty

A legal concept that guarantees a product or service will meet certain expectations of quality and functionality even if not explicitly stated.