The accounting for investments in another entity's equity instruments depends mainly on
A) the level of influence the investor is able to exert.
B) the level of influence the investor actually exerts.
C) the quality of earnings of the investee.
D) whether the investee pays dividends.

Question

Quizplus · Accepted Answer

The accounting for investments in another entity's equity instruments primarily depends on the level of influence the investor is able to exert over the investee, which determines whether the investment is accounted for using the cost method, equity method, or consolidation.

The Accounting for Investments in Another Entity's Equity Instruments Depends