_____ When an investor's ownership percentage in an investee company goes from 30% to 100%, the use of the equity method in accounting for the investment prior to control results in producing amounts in the parent's analysis of its Investment account as of the control date as if the following had been applied:
A) the date of latest purchase method.
B) the step-by-step method.
C) the parent company concept.
D) the economic unit concept.
E) None of the above.

Question

Quizplus · Accepted Answer

The step-by-step method is used when an investor's ownership in an investee increases over time, including going from significant influence (20%-50% ownership, typically accounted for using the equity method) to full control (over 50% ownership). This method adjusts the investor's equity in the investee incrementally with each purchase of additional shares.

_____ When an Investor's Ownership Percentage in an Investee Company