When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor

	a.	should apply the cost method in accounting for the investment.
	b.	has significant influence on the investee and that the equity method should be used to account for the investment.
	c.	will prepare consolidated financial statements.
	d.	has insignificant influence on the investee and that the cost method should be used to account for the investment.

1. Under the equity method, the Stock Investments account is increased when the

   	a.	investee company reports a loss.
   	b.	stock investment is sold at a gain.
   	c.	investee company reports net income.
   	d.	investee company pays a dividend.