An investment of 20% or more in the outstanding common stock of the investee leads to the presumption of significant influence and the use of the consolidation method.

Question

Quizplus · Accepted Answer

An investment of 20% or more typically leads to the presumption of significant influence, but it uses the equity method, not the consolidation method. Consolidation is used when there is control, usually indicated by owning more than 50% of the voting stock.

An Investment of 20% or More in the Outstanding Common