The asset class 'investments accounted for using the equity method' will only appear on the balance sheet if:
A)the entity owns 100% of the shares in another entity
B)the entity owns 75% of the shares in another entity
C)the entity owns enough shares in another entity to enable it to exert significant influence over the other entity's decision making
D)the entity owns enough shares in another entity to enable it to exert

Question

Quizplus · Accepted Answer

Investments accounted for using the equity method are those in which the investing company (entity) owns enough shares in another entity to enable it to exert significant influence over the other entity's decision making, but not enough to have control over it. Thus, the correct option is C. Options A and B are incorrect because they indicate full ownership or majority ownership, which would result in the investment being accounted for using consolidation. Option D is incomplete and does not specify the level of ownership required.

The Asset Class 'Investments Accounted for Using the Equity Method