Chapter 2, Problem 2.2.1E

Multiple-Choice Questions on Intercorporate Investments
Select the correct answer for each of the following questions.
1. Companies often acquire ownership in other companies using a variety of ownership arrangement. The investor should use equity-method reporting whenever
a. The investor purchases voting common stock of the investee.
h. The investor has significant influence over the operating and financing decisions of the investee.
c. The investor purchases goods and services from the investee.
d. There is no differential included in investment, the carrying value of the investment is less than the market value of the investee’s shares held by the investor.