Benson Incorporated owns 32% of Denver Company's outstanding voting stock. Benson Incorporated should account for its investment in Denver using the:

Question

Quizplus · Accepted Answer

According to the information given, Benson Incorporated owns 32% of Denver Company's outstanding voting stock. The equity method is used when an investor has significant influence over the investee, but does not control it. Significant influence is generally assumed to exist when an investor owns between 20% and 50% of the voting stock of an investee. Therefore, Benson Incorporated should account for its investment in Denver using the equity method.

Benson Incorporated Owns 32% of Denver Company's Outstanding Voting Stock