Which he fair value option can be applied to investments

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Reference no: EM132789440

Problem 1: Say which of the following three statements is (are) true:

ONE: 20% investment is an automatic criterion; that is, if the investment is less than 20%, the equity method cannot be used.

TWO: If the investor owns 49% of the common shares of Investee, they have to use the equity method regardless of the circumstances.

THREE: The only way an investor can gain control over another company is by acquiring more than 50% of the common stock.

a. One, two and three

b. Only THREE

c. Two and three

d. None of the three

Problem 2: The fair value option (FVO) can be applied to the following investments:

a. Classified as Hold-to-Maturity (HTM)

b. Classified as available for sale (AFS)

c. Accounted for under the equity method

d. All of the above

Problem 3: Once the market value option (FVO) is adopted, the decision is irreversible.

a. TRUE

b. FALSE

Reference no: EM132789440

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