When an investor owns between 20% and 50% of the common stock of a corporation,

ID: 2379873 • Letter: W

Question

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor

Answer

has insignificant influence on the investee and that the cost method should be used to account for the investment.

should apply the cost method in accounting for the investment.

will prepare consolidated financial statements.

has significant influence on the investee and that the equity method should be used to account for the investment.

has insignificant influence on the investee and that the cost method should be used to account for the investment.

should apply the cost method in accounting for the investment.

will prepare consolidated financial statements.

has significant influence on the investee and that the equity method should be used to account for the investment.

has significant influence on the investee and that the equity method should be used to account for the investment.

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