Asked by Ashley Elizabeth on May 14, 2024
Verified
In accounting for stock investments of less than 20% the equity method is used.
Equity Method
An accounting method in which the investment in common stock is initially recorded at cost, and the investment account is then adjusted annually to show the investor’s equity in the investee.
Stock Investments
Financial assets representing ownership in a company or corporation, typically traded on stock exchanges.
- Absorb the essential theories and practices in recording entries for equity and debt investments.
Verified Answer
AH
Alexander HartzlerMay 16, 2024
Final Answer :
False
Explanation :
The equity method is used for stock investments between 20% and 50%. For investments of less than 20%, the cost method is typically used.
Learning Objectives
- Absorb the essential theories and practices in recording entries for equity and debt investments.
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