Wyoming Company has 40,000 shares of its common stock outstanding.Dakota Company owns 35,000 shares of Wyoming Company's stock.Which of the following methods should Dakota Company use to account for its investment in Wyoming Company?
A) market-value
B) equity
C) consolidated financial statements
D) cost

Question

Quizplus · Accepted Answer

Since Dakota Company owns 35,000 out of 40,000 shares of Wyoming Company's stock, this represents an ownership of 87.5% (35,000/40,000), which typically requires the use of consolidated financial statements due to the significant influence and control over the investee.

Wyoming Company Has 40,000 Shares of Its Common Stock Outstanding