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

Question

Quizplus · Accepted Answer

The equity method of accounting is typically used when an investor has between 20% and 50% ownership in an investee company. When an investor owns less than 20% of an investee company, the investor is deemed to have insignificant influence and is required to use the fair value method. When an investor owns more than 50% of an investee company, the investor is deemed to have control and is required to use the consolidation method.

The Equity Method of Accounting for Long-Term Equity Investments Is