Asked by
Sandro Rodriguez
on Nov 18, 2024Verified
The equity method is usually more appropriate for accounting for investments where the purchaser does not have significant influence over the investee.
Equity Method
An accounting technique used to record investments in other companies, where the investment is significant but does not grant control over the company.
Significant Influence
The ability to affect the financial and operating policies of another entity through ownership, contract, or other means, without having full control or ownership.
- Execute the equity method of accounting for investments when the investor possesses considerable influence on the investee entity.
Verified Answer
GS
Learning Objectives
- Execute the equity method of accounting for investments when the investor possesses considerable influence on the investee entity.