1. Which of the following statements is not true of the fair-value method of accounting for marketable securities?
a. The investment account is recorded at current fair value on the balance sheet.
b. Interim changes in the investments’ fair value may or may not affect income depending on the securities’ classification.
c. This method is used when the reporting company generally owns less than 20% of the investee company.
d. Dividends are treated as a return of the capital invested.
e. None of the above.
2. Which of the following is not a correct statement about noncontrolling interest?
a. Noncontrolling interest is reported as a component of stockholders’ equity on the balance sheet.
b. Noncontrolling interest represents their claim to their proportionate share of the net assets and net income of the subsidiary in which they own stock.
c. Noncontrolling interest is a residual claim, like that of any other shareholder.
d. Noncontrolling interests are entitled to preference in dividends and payouts in liquidation.