Not all companies using the equity method of accounting for an investment will consolidate the financial statements of investees at year-end.

Question

Quizplus · Accepted Answer

Under the equity method, an investor recognizes its share of the profits and losses of the investee in its own financial statements, rather than consolidating the financial statements of the investee with its own. Consolidation is typically required only when the investor has control over the investee, usually indicated by ownership of more than 50% of the voting shares.

Not All Companies Using the Equity Method of Accounting for an Investment