How Does the Equity Method Distort Earnings

question 30

Multiple Choice

How does the equity method distort earnings?

• A)Income is recognized even though cash may never be received.
• B)Equity earnings are recorded even if the investor cannot exercise influence over the investee's policies.
• C)Equity earnings are only recorded on a cash basis of accounting.
• D)Equity earnings are recorded when investment ownership is 100%.

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