When a company owns 20% to 50% of the voting stock in another company,the market method generally will not reflect the economic relationship between the investor and the investee.

Question

Quizplus · Accepted Answer

The market method assumes that the economic relationship between the investor and the investee is proportional to the percentage of voting stock owned. However, when the ownership is between 20% to 50%, the investor may not have significant influence over the investee's operations and decision-making, which means the market method may not accurately reflect their relationship.

When a Company Owns 20% to 50% of the Voting