PK owns 18% of the outstanding shares of KM, and holds 22.2% of the seats on KMs board of directors. PK has a significant level of intercompany transactions with KM. Another company, ZZ, owns 20% of the shares of KM and has 33.3% of the seats on KMs board of directors. The remaining shares of KM are widely held. Which of the following accounting methods would you recommend for PK to report its interest in KM?

A. The consolidation method

• B. The equity method

• C. Fair value method

• D. The cost method