Explain Why the Equity Method Is Not Applied to an Investor

question 16

Essay

Explain why the equity method is not applied to an investor and associate relationship unless the investor holds shares in the associate.

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Definitions:

Outsourcing

The business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house by the company's own employees.

Outplacement Services

Professional services that help terminated employees transition to new jobs by providing support such as resume writing and interview preparation.

Downsizing

Reducing the number of employees on an organization's payroll as a cost-cutting measure or to improve efficiency.

Voluntary Turnover

When an employee decides to leave a company on their own accord rather than being fired or laid off.