Acquisition of greater than 20% of the outstanding stock of a company normally suggests that the investor should use the

Question

Quizplus · Accepted Answer

When an investor acquires more than 20% but less than 50% of the outstanding stock of a company, it typically indicates significant influence over the investee, and the equity method of accounting is generally used. This method recognizes the investor's share of the investee's income and changes in equity.

Acquisition of Greater Than 20% of the Outstanding Stock of a Company