C is corrent. ASC Topic 810 states that consolidated financial statements should generally be prepared when there is greater than 50% ownership of the outstanding voting stock of the company, although unusual circumstances may arise in which reporting under the equity method or even the cost method is more appropriate. (Note that consolidation may also refer to a form of business combination where two or more entities form a new entity.) The exhibit below illustrates the accounting treatment for equity investments.
A is incorrect because the ownership in voting stock is greater than 20%.
B is incorrect. The equity method is used for ownership of from 20 to 50%.
D is incorrect because the ownership in voting stock is greater than 20%.
|
