The consolidation method of accounting is appropriate when an investor controls an investee by ownership of more than 50% of the investee's common stock.

Question

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The consolidation method is used when an investor has a controlling interest of more than 50% in an investee. It combines the financial statements of the two entities as if they were one entity, consolidating assets, liabilities, revenues, expenses, and cash flows.

The Consolidation Method of Accounting Is Appropriate When an Investor