If Push Company owned 51 percent of the outstanding common stock of Shove Company,which reporting method would be appropriate?
A) Cost method
B) Consolidation
C) Equity method
D) Merger method

Question

Quizplus · Accepted Answer

Consolidation is appropriate when one company owns the majority of another company. In this case, Push Company owns over 50% of Shove Company's outstanding common stock, meaning it has control over Shove Company's operations and financial decisions. Therefore, consolidation is necessary to fully reflect the financial statements of both companies. The cost and equity methods are not appropriate in this scenario because Push Company has a controlling interest, not just a passive investment. The merger method is not a reporting method, but rather a way to combine two companies into one.

If Push Company Owned 51 Percent of the Outstanding Common