Where the investor is not a parent, the investor applies:
A) the cost method to its associates in its own accounting records.
B) the equity method to its associates and subsidiaries in the consolidated financial statements.
C) the fair value method to its associates in its own accounting records.
D) the equity method to its associates in its own accounting records.

Question

Quizplus · Accepted Answer

When the investor is not a parent, it applies the equity method to its associates in its own accounting records. This is because the equity method is used to account for investments in associates where the investor has significant influence but not control, and it allows the investor to reflect its share of the associate's profits or losses in its own financial statements.

Where the Investor Is Not a Parent, the Investor Applies