The Equity Method Is Used to Account for Stock Investments

question 72

True/False

The equity method is used to account for stock investments in which the investor company owns less than 20%.

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Definitions:

Domestic Corporations

Companies that are incorporated under the laws of a specific country and operate within that country.

Noncontrolling Interest

The portion of equity in a subsidiary not owned by the parent company, also known as minority interest.

Domestic Corporations

Corporations that are incorporated and operate in the same country in which they are registered.

Consolidated Income Tax Return

A single income tax return filed by a parent company on behalf of itself and its subsidiaries, consolidating their income and taxes as one entity.