Advanced Financial Accounting
Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 4, Problem 4.3Q
To determine

Equity Method:

The equity method is used by the investing entity to record its investment in the investee entity. In this method, the investing company records its share in the profit of the investee company in its income statement. The investment value is also adjusted with the amount of share in profit or loss.

The equity method is applied only when the investing entity has significant influence over the investee entity.

To Indicate the factor which may cause to report lower income from 100% common share investment in an investee.

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Advanced Financial Accounting

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