Question One: Make True or False of the following sentences: $-$

The investor does not need to hold shares in an associate, but where mare than $20\%$ of the voting power is held, significant influence is presumed to exist.

A company should always use the equity method to account for an investment if It has the ability to exercise significant influence over the operating policies of the investee.

An upstream sale of inventory is a sale made by the investor to the investee.

By using the equity method, The investment is recorded at cost$.$

Equity method is used when the investor has non$-$significant influence over the investee.

Company invest in another company to earn high rate of return.

Fair value method uses when Investor can significantly affect investee's operations.

Equity method used when ownership is between $20\%$ and $50\%.$ T

$9.-$ Under the equity method, investor's share of investee dividends declared are recorded as decreases in the investment account, not income.

Consolidation of financial statements used when Investor's ownership exceeds $50\%$ of an organization's outstanding voting stock.

Question Two: Choose the best answer in the following sentences: $-$

Gaw Company owns $15\%$ of the common stock of Trace Corporation and used the fair$-$value method to account for this investment. Trace reported net income of $$110,000$ for $2011$ and paid dividends of $$60,000$ on October $1,2011.$ How much income should Gaw recognize on this investment in $2011?$