The equity method of accounting for an investment in an associate includes the following steps:

Question

Quizplus · Accepted Answer

The equity method of accounting for an investment in an associate includes only step II, which is to recognize the investor's share of the associate's profit or loss in the investor's profit or loss statement. The other steps in the image are not specific to the equity method and may not apply to all investments.

The Equity Method of Accounting for an Investment in an Associate