Which method of accounting will generally be used when one company purchases between 20% to 50% of the outstanding stock of another company?

Question

Quizplus · Accepted Answer

When a company purchases between 20% to 50% of the outstanding stock of another company, it is generally considered to have significant influence over the investee. According to Generally Accepted Accounting Principles (GAAP), the equity method is prescribed for such investments, reflecting the investor's proportional share of the investee's net income or loss in its own financial statements.

Which Method of Accounting Will Generally Be Used When One