The consolidation method is used to account for long-term investments in equity securities with controlling influence.

Question

Quizplus · Accepted Answer

The consolidation method is indeed used to account for long-term investments in equity securities with controlling influence. It involves combining the financial statements of the investing company and the investee company into a single set of statements, with the investing company reporting the assets, liabilities, revenues, and expenses of the investee as if they were its own. This method is used when the investing company has the ability to control or exert significant influence over the investee.

The Consolidation Method Is Used to Account for Long-Term Investments