The use of the equity method primarily provides information to the investor in relation to:
A) profit performance of the investee
B) valuation of the investment
C) Dividend policy of the investee
D) none of the above

Question

Quizplus · Accepted Answer

The equity method provides information to the investor about the profit performance of the investee. This is because the investor records its proportionate share of the investee's profit or loss on its own income statement. The equity method does not provide information about the valuation of the investment or the dividend policy of the investee.

The Use of the Equity Method Primarily Provides Information to the Investor