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.

Question

Quizplus · Accepted Answer

Since Piano Company owns more than 50% of the voting common stock of Keys Corporation, it has control over Keys. Therefore, the investment would be accounted for by consolidation, where Piano Company would consolidate Keys Corporation's financial statements with its own.

Piano Company Owns 55% of the Voting Common Stock Shares