The equity method of accounting for an investment in the common stock of another company should be used by the investor when the investment

A) is composed of common stock and it is the investor's intent to vote the common stock.
B) ensures a source of supply of raw materials for the investor.
C) enables the investor to exercise significant influence over the investee.
D) is obtained by an exchange of stock for stock.

Significant Influence

Refers to the power to participate in the financial and operating policy decisions of another entity, without having full control over it.

Common Stock

It represents shares of ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profits or losses.