If 15% of the common stock of an investee company is purchased as a long-term investment,the appropriate method of accounting for the investment is:
A)the equity method.
B)the consolidation method.
C)the fair value method.
D)the lower of cost or market method.

Question

Quizplus · Accepted Answer

The fair value method is appropriate for accounting for an investment when the ownership is less than 20%, as it typically does not provide the investor with significant influence over the investee.

If 15% of the Common Stock of an Investee Company