Which of the following is incorrect? An analyst should be aware of the following when analyzing a company that has significant investments recorded using the equity method.
A) Cash flow received from investee may be substantially different from investment income recorded.
B) As investee's liabilities are not recorded on the company's balance sheet, there may be significant off-balance-sheet financing.
C) They must mark investment in investee to market even though there may be no ready market in which they can sell their investment.
D) Company must record pro rata share of investee's earnings, which may not be well correlated with changes in market value of investee.
Correct Answer:
Verified
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