Under which of the following situations is using the Equity Method inappropriate for an Investor’s financial reporting?
A. The Investor owns 25% of the common stock of the Investee and exerts significant control through representation on the board of directors.
B. The Investor owns 22% of the common stock of the Investee and has failed to elect a representative to the Investee’s board because the remaining 78% of the shares are owned by a family that opposes the Investor’s interference.
C. The Investor owns 19% of the common stock of the Investee and has representation on the Investee’s board. Furthermore, the Investor accounts for 45% of the revenue of the Investee.
D. The Investor forms a Joint Venture (JV) with another company; each party owns 50% of the JV, and major policy and strategy decisions must be agreed to by both parties.
