If a company acquires a 40% common stock interest in another company

A) the equity method is usually applicable.
B) all influence is classified as controlling.
C) the cost method is usually applicable.
D) the ability to exert significant influence over the activities of the investee does not exist.

Equity Method

An accounting technique used for recording investments in associate companies where the investor has significant influence but does not have full control.

Common Stock

A type of equity security that represents ownership in a corporation, granting holders voting rights and a share in the company's profits through dividends.

Significant Influence

The ability to impact the decision-making of another company, typically through ownership of a considerable percentage of shares or voting rights, but not full control.