Asked by Brianna Weidaman on Jun 18, 2024
Verified
A company that acquires less than 20% ownership interest in another company should account for the stock investment in that company using
A) the cost method.
B) the equity method.
C) the significant method.
D) consolidated financial statements.
Cost Method
An accounting method used to value inventory or investments at their original cost, without considering market value changes.
Ownership Interest
A legal or equitable claim in a company or property, signifying a portion of ownership by an individual or entity.
Stock Investment
Stock investment involves purchasing shares of a company's stock in expectation of earning a return from dividends or capital appreciation.
- Recognize and categorize various investment vehicles a corporation may possess.
- Show comprehension of using the equity method for investment accounting, particularly when considerable control is exercised over the entity being invested in.
Verified Answer
Learning Objectives
- Recognize and categorize various investment vehicles a corporation may possess.
- Show comprehension of using the equity method for investment accounting, particularly when considerable control is exercised over the entity being invested in.
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