The fair value method of accounting for long-term investments in stock should be used when the:
A)investor owns less than 20% of the outstanding stock of the investee.
B)investor has significant influence over the investee's operating decisions and policies.
C)investor has little or no influence on the investee.
D)A and C.

Question

Quizplus · Accepted Answer

The fair value method is used when the investor has little or no influence over the investee, typically when owning less than 20% of the outstanding stock, making both A and C correct.

The Fair Value Method of Accounting for Long-Term Investments in Stock