Discuss How the Equity Method of Accounting for Investments Prevents

question 77

Essay

Discuss how the equity method of accounting for investments prevents managers of the investor corporation from manipulating income related to dividends from the investee.

---

Definitions:

Formal Structures

The officially designated channels of communication and division of responsibilities within an organization.

Policies

Established guidelines, rules, or principles that dictate how an organization’s affairs should be conducted, directing both strategy and operations.

Tasks

Refers to specific duties or pieces of work assigned or required as part of a job or role.

Setting Standards

The process of establishing criteria or benchmarks that define expected levels of performance, quality, or conduct.