On August 1,2013,Abruzzo Corp.acquired 10,000 of the outstanding shares of Tuscany Co.On January 2,2014,Abruzzo acquired an additional 20,000 shares of Tuscany Co. ,which brought the total ownership to 30,000 shares.Using the normal guidelines for percentages of ownership and assuming that Tuscany Co.had 100,000 shares outstanding during 2013 and 2014,Abruzzo Corp.should account for the investment in Tuscany Co.by using the

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According to the normal guidelines for percentages of ownership, ownership exceeding 20% is considered significant, and the equity method should be used. Thus, in 2014, when Abruzzo Corp. acquired an additional 20,000 shares to bring their total ownership to 30,000 shares (30% ownership), they must use the equity method. However, for 2013, since they only owned 10,000 shares (10% ownership), the cost method should be used. Therefore, the best choice is to use the cost method in 2013, retroactively adjusting the investment account to the equity method at the beginning of 2014, and using the equity method in 2014. Option B is the only choice that fits this explanation.