For accounting purposes, the method used to account for investments in common stock is determined by a. whether the stock has paid dividends in past years b. whether the acquisition of the stock by the investor was "friendly" or "hostile" c. the extent of an investor's influence over the operating and financial affairs of the investee d. the amount paid for the stock by the investor

Question

Lukas Rosario

Business

5 September, 16:59

For accounting purposes, the method used to account for investments in common stock is determined by a. whether the stock has paid dividends in past years b. whether the acquisition of the stock by the investor was "friendly" or "hostile" c. the extent of an investor's influence over the operating and financial affairs of the investee d. the amount paid for the stock by the investor

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Gideon · Answer 1

c. the extent of an investor's influence over the operating and financial affairs of the investee.

Explanation:

If the influence is significant enough then the equity method or else cost method is used to account for investments in common stock.