B . Decrease | No Effect C . Increase | Decrease D . No Effect | Decrease
24 ) When a company holds between 20 % and 50 % of the outstanding stock of an investee , which of the following statements applies ?
A . The investor must use the fair value method unless it can clearly demonstrate the ability to exercise “ significant influence ” over the investee .
B . The investor should always use the fair value method to account for its investment .
C . The investor should use the equity method to account for its investment unless circum-stances indicate that it is unable to exercise “ significant influence ” over the investee .
D . The investor should always use the equity method to account for its investment .
25 ) Use of the effective-interest method in amortizing bond premiums and discounts results in
A . a variable rate of return on the book value of the investment .
B . a smaller amount of interest income over the life of the bond issue than would result from use of the straight-line method .
C . a varying amount being recorded as interest income from period to period .
D . a greater amount of interest income over the life of the bond issue than would result from use of the straight-line method .
26 ) Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses as other