The equity method of accounting for investments requires:

Question

Quizplus · Accepted Answer

The equity method requires that the proportionate share of investee's earnings should be recorded as investment income. The other options are not correct. A is incorrect because marking to market is not required under the equity method. C is incorrect because having significant influence is a requirement of using the equity method. D is incorrect because goodwill related to the purchase of an investee's stock is already accounted for in the equity method.

The Equity Method of Accounting for Investments Requires