What is the appropriate reporting method for less than majority owned companies?

Question

Quizplus · Accepted Answer

When an investor has less than majority ownership in a company, they can use either the equity method or the fair value method to report their investment, depending on whether they can exercise significant influence over the operating and financial policies of the company. The equity method is used when the investor has significant influence and allows the investor to report the investment on their balance sheet based on their share of ownership of the company's net assets. The fair value method is used when the investor does not have significant influence and requires the investor to report the investment at fair value on their balance sheet, with changes in fair value recorded in the income statement. Therefore, the best choice is C.

What Is the Appropriate Reporting Method for Less Than Majority