The consolidation accounting method is appropriate when an investor controls an investee by ownership of more than 50% of the investee's voting stock.

Question

Quizplus · Accepted Answer

This is correct as per generally accepted accounting principles (GAAP). When an investor has more than 50% of the voting stock of an investee, they are considered to have control and must consolidate the investee's financial statements with their own. This method is used to present the financial statements of the parent company and its subsidiaries as if they were a single entity.

The Consolidation Accounting Method Is Appropriate When an Investor Controls