When a Company Holds Between 20% and 50% of the Outstanding

Multiple Choice

When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following statements applies?

A) The investor must use the fair value method unless it can clearly demonstrate the ability to exercise "significant influence" over the investee
B) The investor should always use the equity method to account for its investment
C) The investor should use the equity method to account for its investment unless circumstances indicate that it is unable to exercise "significant influence" over the investee
D) The investor should always use the fair value method to account for its investment