Question

Armando Company owns 17,000 of the 70,000 shares of common stock outstanding of Tito Company and exercises a significant influence over its operating and financial policies. The investment should be accounted for by the

Answer 1

Answer:

Equity method  

Explanation:

For accounting the investment, first we have to determine the percentage which is shown below:

= Owned shares ÷ outstanding shares of common stock × 100

= 17,000 ÷ 70,000 × 100

= 24.28%

By finding out the percentage, the investment is accounting by the equity method as the common stock outstanding shares is mentioned in the question