Chapter 1, Problem 17.3EC

If you were to start a business, what ownership form would you choose? Wjat factors might affect your choice?

If you have the chance to invest in the stock market, what company will you invest in and why? Explain your methods or steps in choosing that company.

Choose the letter of the correct answer: 1. In which of the following situations would an investor likely account for stock ownership in an investee using the equity method? A. The investor and the investee have many transactions with each other B. The investor owns 15 percent of the investee’s stock   C. The investor and investee reside in close proximity to each other   D. The investor has significant influence over the investee’s management policies   2. When the cost model/method is used to account for an investment, which of the following would not result in an adjustment to the amount recorded in the investment account?   A. The investee declares a regular dividend   B. The investor sells some of the stock   C. The investee declares a liquidating dividend   D. The stock’s market value decreases to a point where is it below the investor’s cost