You are auditing a company that owns twenty percent of the voting common stock of another corporation and uses the equity method to account for the investment. How would you verify that the equity method is appropriate in this case?
What will be an ideal response?
In order to verify that the equity method is appropriate, the auditor should determine whether the investor is able to exercise significant influence over the operations of the investee. The ability to influence the investee's operations is the most important criterion for adopting the equity method. The auditor should look for such evidence of significant influence such as: (1) frequent or material intercompany transactions; (2) exchange of managerial personnel; (3) technological interdependency; and (4) investor participation in the decision-making process of the investee.
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The process of gathering information about the competitive environment, including competitors' plans, activities, and products, to improve a company's ability to succeed is the definition of ________.
A. Competitive intelligence B. Information C. Data D. Feedback
Indirect costs allocated to products using activity-based costing are more accurate than traditional allocation systems
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Great State Bank loans money to Seth, securing the loan with property owned by Seth. Great State Bank is advised by its attorney to file a financing statement. Great State Bank doesn't understand why it should spend the extra money for this filing, since Seth has told them that he has no other creditors. Why should Great State Bank file a financing statement?
A. There are criminal penalties for failing to file. B. The financing statement allows Great State Bank to repossess the collateral on default without a court order. C. The financing statement will protect Great State's priority rights with other creditors by giving notice to other creditors that it claims a security interest in the collateral. D. Filing the financing statement is necessary to complete the attachment requirement in order to create a security interest.
Today's organizations are heavily dependent on computer systems
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