Agwen Corporation owns 25% of the shares of Bronwo Corporation, which traded on the New York Stock Exchange. Which method is Agwen most likely to use to account for this investment?

Question

Quizplus · Accepted Answer

Agwen Corporation has significant influence over Bronwo Corporation with a 25% ownership stake. As per the equity method of accounting, Agwen will record its proportionate share of Bronwo's net income or loss on its income statement and will reflect its share of Bronwo's assets, liabilities, and equity in its balance sheet. Therefore, the equity method would be the appropriate method for Agwen to account for its investment in Bronwo.

Agwen Corporation Owns 25% of the Shares of Bronwo Corporation