Significant influence equity investments must be accounted for using the equity method.

Question

Quizplus · Accepted Answer

Significant influence equity investments are those in which the investor owns between 20% and 50% of the investee's common stock and has significant influence over the investee's operating and financial policies. Under the equity method, the investor records its share of the investee's net income or loss and any dividends received as a single line item on the income statement.

Significant Influence Equity Investments Must Be Accounted for Using the Equity