Accountants require investors with significant influence,but not control,over the decisions of an investee firm to use the ________ method.
A) equity
B) cost
C) market value
D) lower of cost or market

Question

Quizplus · Accepted Answer

The equity method is used when the investor has significant influence over the investee but does not have control. This method requires the investor to report its share of the investee's net income or loss on the investor's income statement. The other options, such as cost method, market value method or lower of cost or market method, are not suitable for situations where the investor has significant influence over the investee.

Accountants Require Investors with Significant Influence,but Not Control,over the Decisions