When equity ownership of another company is below 20%,the market method is required.

Question

Quizplus · Accepted Answer

When equity ownership of another company is below 20%, the market method is required. The market method is used to determine the fair value of a company's investment in another company when the investment is less than 20% of the total outstanding stock of the other company. If the ownership is above 20%, then the investor can use the equity method to account for the investment.

When Equity Ownership of Another Company Is Below 20%,the Market