A Company That Owns Less Than 20% of Another Company's

question 2

True/False

A company that owns less than 20% of another company's stock must use the consolidation method of accounting.

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Definitions:

Casting Department

A specialized department in a manufacturing company where materials are poured into molds to create a part or component of the final product.

Equivalent Unit

A term used in cost accounting to represent a unit of production in partially completed goods adjusted for the degree of completion.

Process Costing

An accounting method used when producing homogeneous products, calculating costs at each stage of production.

First-In, First-Out

An accounting method where the earliest stock added to inventory is recorded as sold first.