Adam Co. owns 60% of Beesly Co. Beesly Co owns 55% of Cake Co. Cake Co. owns 54% of Doberman Co. which of the following is correct?

Adam does not directly own a majority of Doberman, thus consolidation cannot be used and the investment must be reported at cost.

Adam indirectly owns less than 20% of Doberman, thus the equity method should be used for adam.

Cake owns a majority of Doberman and they should consolidate their financial statements, but this consolidation must be adjusted out before Cake is consolidated into Beesly FS's. the same adjustment would need to be made before consolidating Beesly into Adams FS's.

Doberman should be consolidated into Cake's financial statements which would then be consolidated into Beeslys fs's which would then be consolidated into Adams FS's. this represents a vertical chain.