Significant interest investments must be accounted for using the ________.

Question

Quizplus · Accepted Answer

The equity method is the appropriate accounting method for significant interest investments, which are typically investments where the investor has between 20% and 50% ownership of the investee's voting stock. The equity method involves recognizing the investor's share of the investee's net income or loss and adjusting the investment account for changes in the investee's equity. The consolidation method is used when the investor has more than 50% ownership and control of the investee, while the discounted cash flow method and acquisition method are used in other contexts, such as valuing a business for a potential acquisition.

Significant Interest Investments Must Be Accounted for Using the ________