The cost method of accounting for investments in stock should be used when the investment is
A) influential and controlling.
B) influential and noncontrolling.
C) controlling.
D) non-influential and noncontrolling.

Question

Quizplus · Accepted Answer

The cost method of accounting for investments in stock should be used when the investment is non-influential and noncontrolling. This means the investor does not have significant influence over the investee and does not own a controlling stake in the company. Under the cost method, the investment is recorded at its original purchase cost and any dividends received are recorded as income.

The Cost Method of Accounting for Investments in Stock Should