Chapter 15, Problem 8RQ

To determine

Concept Introduction:

Consolidation of accounts:

When a company make investment in a company, and if the share purchased by the company represents more than 50 % of the voting stock, then the accounting method that will be used to record the investment is Consolidation of accounts

In consolidation method, the company who purchases shares more than 50 % will be treated as parent company and the company whose shares are bought will be treated as subsidiary company.

The method that will be used for investments in equity shares with more than 50 % ownership.