When is the equity method not used to account for long-term investments in stocks?
A) When the investment is 30% of the voting stock and signiﬁcant inﬂuence can be achieved.
B) When the investment is 15% and signiﬁcant inﬂuence can be achieved.
C) When the investment is greater than 50% of the voting stock and control is achieved.
D) When the investment is 40% of the voting stock and signiﬁcant inﬂuence can be achieved.

Question

Quizplus · Accepted Answer

The equity method is not used when an investment grants control over another company, typically indicated by ownership of more than 50% of the voting stock. In such cases, consolidation accounting is used instead.

When Is the Equity Method Not Used to Account for Long-Term