When an Entity Reduces Its Interest in an Investment in Equity

question 16

Multiple Choice

When an entity reduces its interest in an investment in equity securities accounted for by the equity method,and changes to the fair value method,what is the initial cost value for purposes of subsequent changes in market value?

• A) Original cost
• B) Book value at the date of change
• C) Market value at the date of the change
• D) Market value at the date of acquisition

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Definitions:

Union Avoidance

Strategies and practices employed by companies to prevent employees from joining or forming labor unions.

Representation Election

A formal process in which employees vote to decide whether they wish to be represented by a union.

Bargaining Representative

A person or entity designated to negotiate on behalf of a group during collective bargaining processes.

Good Faith

The assumption that parties in a transaction will act honestly and not seek to deceive or defraud each other.