When is the equity method used to account for long-term investments in stocks?
A) When the investment is between 20 - 50% of the voting stock, whether or not signiﬁcant inﬂuence can be achieved.
B) When the investment is greater than 50% of the voting stock, whether or not signiﬁcant inﬂuence can be achieved.
C) When the investment is greater than 50% of the voting stock and signiﬁcant inﬂuence can be achieved.
D) When the investment is between 20 - 50% of the voting stock and signiﬁcant inﬂuence can be achieved.

Question

Quizplus · Accepted Answer

The equity method is used when the investment is between 20% and 50% of the voting stock and the investor has significant influence over the investee, but does not have control, as typically indicated by ownership of more than 50%.

When Is the Equity Method Used to Account for Long-Term