When a Company Purchases Less Than 50% of the Equity

Multiple Choice

When a company purchases less than 50% of the equity securities of another company, which of the following statements is true?

A) Both companies' financial statements must be combined in consolidation.
B) The equity method of accounting will be required if the company's investment is at least 20%.
C) The fair value method of accounting will be used only if the securities are classified as available-for-sale.
D) The fair value method of accounting will be used only if they are trading securities.