An investor should always use the equity method to account for an investment if:

Multiple Choice

• It has the ability to exercise significant influence over the operating policies of the investee.
• It owns 30% of an investee's stock.
• It has a controlling interest (more than 50%) of an investee's stock.
• The investment was made primarily to earn a return on excess cash.
• It does not have the ability to exercise significant influence over the operating policies of the investee.