Question

The equity method of accounting for an equity investment of a company probably will be used when the proportion of its voting shares held is as low as: :

a. 20%
b. Any percent, as long as there is a demonstrated significant influence
c. 50%
d. 18%

Answer 1

The equity method of accounting for an equity investment is used when the investor holds at least 20% of the voting shares of the investee.

Step-by-step explanation:

The equity method of accounting for an equity investment of a company is typically used when the investor holds at least 20% of the voting shares of the investee. This means that option a. 20% is the correct answer. The equity method allows the investor to record their share of the investee's profits and losses as well as any dividends received, as it indicates significant influence over the investee's operations and financial results.