The mark-to-market method of accounting for long-term equity investments is typically used when:

Question

Quizplus · Accepted Answer

The mark-to-market method, also known as fair value accounting, is typically used when the investor has a passive interest in the investee, which is generally considered to be when the investor owns less than 20% of the investee company. This is because ownership of less than 20% usually does not give the investor significant influence over the investee, making fair value a more appropriate measure of the investment's value on the balance sheet.

The Mark-To-Market Method of Accounting for Long-Term Equity Investments Is