Question

Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses are Group of answer choices securities where a company has holdings of between 20% and 50%. securities where a company has holdings of less than 20%. securities where a company has holdings of more than 20%. securities where a company has holdings of more than 50%.

Answer 1

Answer

Associate: where a company has holdings of between 20% and 50%.

Minority Interest: where a company has holdings of less than 20%

Parent Company: where a company has holdings of more than 50%.

Explanation:

An associate company (or associate) is a company that owns a business beyond 20% and not more than 50%. In business valuation such a company that has invested significantly in the shares of another company will have voting rights in the board of the acquired company.

Minority Interest is the term used to describe the investments of one company in another company, when such investments are less than 20% of the total value of the acquired company.

Parent Company is a company that owns more than half (50%) of the shares or value of another company.