Which of the following investments below should be accountedfor using the cost m

Question

Which of the following investments below should be accountedfor using the cost method? a) tempory investments in stocks b) long-term investments in stock where the investordoes not have a significant influence over theinvestee c) long-term investment in stock where the investordoes have a significant influence over theinvestee d) temporary investments in stocks and long-term investmentsin stock where where the investor does not have asignificant influence over the investee Which of the following investments below should be accountedfor using the cost method? a) tempory investments in stocks b) long-term investments in stock where the investordoes not have a significant influence over theinvestee c) long-term investment in stock where the investordoes have a significant influence over theinvestee d) temporary investments in stocks and long-term investmentsin stock where where the investor does not have asignificant influence over the investee d) temporary investments in stocks and long-term investmentsin stock where where the investor does not have asignificant influence over the investee

Explanation / Answer

a) tempory investments in stocks - As it is a short terminvestment, it must be Less than 20% & hence will be using Costmethod.
b) long-term investments in stock where the investordoes not have a significant influence over theinvestee - WIll use cost method
c) long-term investment in stock where the investordoes have a significant influence over the investee - willnot use Cost method. d) temporary investments in stocks and long-term investmentsin stock where where the investor does not have asignificant influence over the investee - wil use costmethod.
d) temporary investments in stocks and long-term investmentsin stock where where the investor does not have asignificant influence over the investee - wil use costmethod.

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