When a Company Purchases Less Than 50% of the Equity

question 37

Multiple Choice

When a company purchases less than 50% of the equity securities of another company, which of the following statements is true?

• A)Both companies' financial statements must be combined in consolidation.
• B)The equity method of accounting will be required if the company's investment is at least 20%.
• C)The fair value method of accounting will be used only if the securities are classified as available-for-sale.
• D)The fair value method of accounting will be used only if they are trading securities.

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