The use of consolidation accounting for a long-term investment in common stock of another company is required when the ownership of its voting stock is:
A)20% or more.
B)less than 20%.
C)between 20% and 50%.
D)more than 50%.

Question

Quizplus · Accepted Answer

Consolidation accounting is required when the ownership of voting stock is more than 50%. This means that the investor has a controlling interest in the investee and can influence its operations and financial decisions. By consolidating the financial statements of the investor and investee, a clearer picture of the overall financial performance and position of the combined entity can be presented.

The Use of Consolidation Accounting for a Long-Term Investment in Common