The Equity Method Should Generally Be Used to Account for an Investment

question 62

Multiple Choice

The equity method should generally be used to account for an investment in shares when the level of ownership is

• A) less than 10%.
• B) between 10% and 20%.
• C) 20% or more.
• D) 10% or more.

---

Definitions:

Profitable Product

A product that generates more revenue than the costs involved in its production, marketing, and distribution.

Variable Selling Expense

Costs that vary directly with the volume of sales, including commissions and shipping fees.

Specialized Machine

Equipment designed for a specific purpose or task in the production process, often custom-built or highly specialized.

Financial Advantage

The benefit or gain in financial terms that an entity has, allowing it to achieve better results than others.