Use of the equity method versus the cost method

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Reference no: EM13150537

Which of the following statements applying to the use of the equity method versus the cost method is true?

1. The method used has no significance to consolidated statements.

2. An advantage of the equity method is that no amortization of excess adjustments needs to be made on the consolidated worksheet.

3. If no dividends were paid by the subsidiary, the investment account would have the same balance under both methods.

4. The equity method is required when one firm owns 20% or more of the common stock of another firm.

Reference no: EM13150537

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