EPMBPC_10

[Former Member]

Hi Everbody

I have a doubt, I have seen in many documentos this question below

Company D owns 91% of A, 51% of B, and 49% of C.

Which company can use the equity method?

In my point of view, the answer is The company C because  it have value minor of 50 %

am I  right?

[Former Member · Accepted solution]

Yes, Alberto.

49% represents influence over the company but not majority ownership.  If the company only had say 10% ownership, then it likely does not have significant influence, and would therefore be carried at historic cost or fair market value on the company's balance sheet.

Jeff

[Former Member · Accepted solution]

Thank you Jeff. Then if the question will happen in certification, Can I answer like I put in post all right? Answer C

[Former Member · Accepted solution]

From my understanding, the answer would be C, in your scenario, regardless of whether this is a certification question or otherwise.

Best wishes, if you are sitting for the certification exam!

Jeff