Accountıng Iı Deneme Sınavı Sorusu #1044255

When a company invests in another corporation up to 20% of total outstanding shares, which of the following cannot be assumed?


The security can be reported as trading security.

The security can be reported as available for sale security.

This investment does not represent a managerial role in invested company.

The investor company does not possess an important role in determination of company policies.

The security can be reported as held-to-maturity security.


Yanıt Açıklaması:

When a company invests in another corporation up to 20% of total outstanding shares, it is assumed that the investor company does not possess an important role in determination of company policies. In other words, this investment does not represent a managerial role in invested company. In this case, depending on the intention of management, the security can be reported either as tradingsecurity or available for sale security. The correct answer is E.

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