Company B has 40,000 shares of its common stock outstanding.Company A owns 35,000 shares of Company B stock.Company A should use the _____ method to account for its investment in Company B.
A)market
B)equity
C)cost
D)consolidated

Question

Quizplus · Accepted Answer

Company A owns 35,000 out of 40,000 shares of Company B, which gives it an 87.5% ownership stake. This level of ownership typically requires the use of the consolidated method for accounting, as it indicates significant control over the other company.

Company B Has 40,000 Shares of Its Common Stock Outstanding