The equity method is applied:
A)when one of the parties is designated as no longer being a subsidiary.
B)when a contractual agreement is written up providing joint control.
C)from the date the investor obtains significant influence over the investee.
D)on that date when it becomes clear that an investor has no power to participate in the financial and operating decisions of the investee.

Question

Quizplus · Accepted Answer

The equity method is applied from the date the investor obtains significant influence over the investee. This is typically when the investor acquires between 20% and 50% of the voting shares of the investee. Under the equity method, the investor reports its share of the investee's net income or loss on its own financial statements.

The Equity Method Is Applied