For accounting purposes, the method used to account for investments in common stock is determined by

A) the amount paid for the stock by the investor
B) whether the acquisition of the stock by the investor was "friendly" or "hostile"
C) the extent of an investor's influence over the operating and financial affairs of the investee
D) whether the stock has paid dividends in past years

The method used to account for investments in common stock is determined by the extent of an investor's influence over the operating and financial affairs of the investee. This is because if an investor has significant influence, they must use the equity method of accounting, while if they do not have significant influence, they must use the fair value or cost method of accounting. The amount paid for the stock, whether the acquisition was friendly or hostile, and whether the stock has paid dividends in past years do not determine the accounting method used.