The major limitation of the cost method is that:

Question

Quizplus · Accepted Answer

The major limitation of the cost method is that the investment in the associate only reflects the worth of the investment at the acquisition date, which means that any subsequent increase in the value of the investment will not be recognized until it is sold. This can lead to an understatement of the investor's share of the associate's profits and assets over time. The other options listed are not limitations of the cost method.

The Major Limitation of the Cost Method Is That