ADiscuss the Criteria for Applying the Equity Method of Accounting

question 46

Essay

A.Discuss the criteria for applying the equity method of accounting for long-term investments.
B.Discuss the rationale for the equity method procedures of accounting for long-term investments.

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Definitions:

Debit Balance

An account balance where total debits exceed total credits.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account, used in double-entry bookkeeping.

Credit

An accounting entry that either increases a liability or equity account, or decreases an asset or expense account.

Decrease

A reduction in the size, amount, or rate of something.