With increasing frequency, companies engage in investment activities which may include acquisitions (both domestic and international). Each of the questions below relate to intercorporate investments. Each question is independent and should be answered separately. Note: The Codification may be used.

1. When we consider intercorporate investments, what is meant by significant influence imply regarding intercorporate investments? What are the accounting procedures for investments that are considered to have significant influence?

2. When an investor acquires more than 50% of the investee companys voting stock, what accounting method is used to account for the control that the investor has? Explain.

3. What is the objective of consolidating financial statements?

4. What are the limitations of presenting consolidated financial statements?