Usually,an investment of 20 to 50 percent in another company's voting stock is reported under the:
A)cost method.
B)equity method.
C)full consolidation method.
D)fair value method.

Question

Quizplus · Accepted Answer

An investment of 20 to 50 percent in another company's voting stock is reported under the equity method. This method requires that the investor records its proportionate share of the investee's earnings and dividends in its own financial statements. The cost method is used when the investor holds less than 20% of the voting stock, while full consolidation applies when the investor owns more than 50%. The fair value method is used to report the value of a company's investments in marketable securities.

Usually,an Investment of 20 to 50 Percent in Another Company's