The equity method of accounting is used if the investor owns at least 20% of the investee and the investor is able to secure influence over the investee.

Question

Quizplus · Accepted Answer

The statement is accurate. The equity method of accounting is used when the investor has significant influence over the investee i.e. the investor has the ability to participate in the financial and operating policies of the investee, which is generally the case when the investor owns at least 20% of the investee.

The Equity Method of Accounting Is Used If the Investor