An Investor Should Always Use the Equity Method to Account

question 19

Multiple Choice

An investor should always use the equity method to account for an investment if:

• A) It has the ability to exercise significant influence over the operating policies of the investee.
• B) It owns 30% of an investee's stock.
• C) It has a controlling interest (more than 50%) of an investee's stock.
• D) The investment was made primarily to earn a return on excess cash.
• E) It does not have the ability to exercise significant influence over the operating policies of the investee.

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