If an investor owns less than 20 of the common stock

94. If an investor owns less than 20% of the common stock of another corporation as an
investment
a. the equity method of accounting for the investment should be employed.
b. no dividends can be expected.
c. it is presumed that the investor has relatively little influence on the investee.
d. it is presumed that the investor has significant influence on the investee.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Project
Management, IMA: Business Economics
95. If the cost method is used to account for an investment in common stock, dividends
received should be
FSA
96. Under the cost method of accounting for dividends
FSA
97. If 10% of the common stock of an investee company is purchased as an investment, the
appropriate method of accounting for the investment is