Which of the following methods of accounting for investments is appropriate when the investor controls the investee?

Question

Quizplus · Accepted Answer

When the investor controls the investee, consolidation is the appropriate method of accounting for investments. This method involves combining the financial statements of the investor and investee into a single set of financial statements. This reflects the fact that the investor has a controlling interest in the investee and therefore has the ability to make decisions for the investee. The equity method is used when the investor has significant influence over the investee but does not control it. The cost method is used when the investment is passive and the investor has no significant influence or control over the investee. The lower of cost or market method is used for inventory valuation and is not relevant for accounting for investments in the context of this question.

Which of the Following Methods of Accounting for Investments Is