Usually,an investment of 20 to 50 percent in another company's voting stock is reported under the:
A) Cost method
B) Equity method
C) Full consolidation method
D) Fair value method

Question

Quizplus · Accepted Answer

An investment of 20 to 50 percent in another company's voting stock is reported under the equity method, which requires the investor to account for its investment as an equity interest in the investee's net assets, with adjustments for the investor's share of the investee's earnings or losses. The cost method is used for investments of less than 20 percent and the full consolidation method is used for majority ownership (more than 50 percent). The fair value method is an optional method used for certain investments in equity securities that are not accounted for using the equity method or the cost method.

Usually,an Investment of 20 to 50 Percent in Another Company's