If a company acquires a 40% interest in another company
A)the equity method is usually applicable.
B)it would always have a controlling interest.
C)one of the fair value models is usually applicable.
D)the investor does not have the ability to exert significant influence over the investee.

Question

Quizplus · Accepted Answer

The equity method is usually applicable when a company acquires a significant but not controlling interest (20%-50%) in another company, allowing it to exert significant influence over the investee without having control.

If a Company Acquires a 40% Interest in Another Company