If a company acquires a 40% interest in another company
A) the equity method is usually applicable.
B) it would always have a controlling interest.
C) one of the fair value models is usually applicable.
D) the investor does not have the ability to exert significant influence over the investee.

Question

Quizplus · Accepted Answer

When a company acquires a 40% interest in another company, it is generally presumed to have significant influence over the investee, making the equity method applicable for accounting purposes.

If a Company Acquires a 40% Interest in Another Company