Given the following data for Garcon Company and Pepper Company, which of the following best describes how Garcon should account for its investment in Pepper if Garcon owns 30% of Pepper's voting stock and has significant influence over Pepper's operations?

Step 3: Identify the appropriate accounting method for investments with significant influence. According to accounting standards, when an investor has significant influence over an investee, the equity method is typically used to account for the investment. Under the equity method, the investor recognizes its share of the investee's net income or loss in its own financial statements.

Step 4: Compare the equity method to other accounting methods mentioned in the problem. The cost method is used when there is no significant influence, and consolidation is required only when the investor has control (ownership of more than 50%). Reporting the investment as trading securities at fair value applies to investments held for short-term trading purposes, which is not relevant here.