The method of accounting for subsidiaries that is required for influential investments is the
A)cost method.
B)simple equity method.
C)investment method.
D)sophisticated equity method.

Question

The method of accounting for subsidiaries that is required for influential investments is the
A)​cost method.
B)​simple equity method.
C)​investment method.
D)​sophisticated equity method.

Quizplus · Accepted Answer

The sophisticated equity method, also known as the equity method, is required for accounting for subsidiaries in which there is an influential investment, typically defined as owning 20% or more of the subsidiary's voting stock. This method recognizes the investor's share of the subsidiary's income, losses, and dividends.

The Method of Accounting for Subsidiaries That Is Required for Influential