Camber Corp. owns 10% of Nova Corp's outstanding voting stock. Camber should account for its long-term equity investment in Nova Corp. using:

Question

Quizplus · Accepted Answer

Camber Corp. should use the mark-to-market method (also known as the fair value method) for its investment in Nova Corp. because it owns only 10% of Nova's outstanding voting stock. This level of ownership suggests that Camber does not have significant influence over Nova, which is typically presumed when ownership is between 20% and 50%. Therefore, the equity method and consolidated financial statements are not appropriate. The amortization method is not used for accounting for investments in other companies.