Piano Company owns 55% of the voting common stock shares of Keys Corporation. Which of the following is true?
A)The investment would be accounted for using the equity method.
B)The investment would be accounted for by consolidation.
C)The investment would be accounted for under the fair value method.
D)The investment would be accounted for under the amortized cost methoD.An investment of more than 50% of the outstanding voting stock requires the parent company to use the consolidation method.

Question

Quizplus · Accepted Answer

According to the information provided, Piano Company owns more than 50% of the voting common stock shares of Keys Corporation. Therefore, the investment would be accounted for by consolidation, in which the financial statements of the parent company and its subsidiaries are combined into one set of financial statements.

Piano Company Owns 55% of the Voting Common Stock Shares