Which of the following is true with regard to how to account for company A's investment in company B's common stock?
A)The fair value method is used when A owns more than 50% of B.
B)The equity method is used when A owns from 20% to 50% of B.
C)The consolidation method is used when A owns less than 20% of B.
D)All of the above are true.

Question

Quizplus · Accepted Answer

The equity method is used when a company owns from 20% to 50% of another company's common stock. The fair value method is used when a company owns less than 20% or more than 50%. The consolidation method is used when a company owns more than 50%. Therefore, option A and C are incorrect.

Which of the Following Is True with Regard to How