A Company Should Always Use the Equity Method to Account

question 98

Multiple Choice

A company 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 another company's stock.
• C) it has a controlling interest (more than 50%) of another company'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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