The Equity Method of Accounting for a Stock Investment Should

Multiple Choice

The equity method of accounting for a stock investment should generally be used when the investor owns 20%-50% of the investee's stock, because that level of stock ownership:

A) means the investor has a controlling interest in the investee company
B) gives the investor significant influence over the investee company
C) requires the investor to notify the government of any plans to acquire a controlling interest in the investee company
D) usually indicates a plan to acquire a controlling interest of the investee company