If the book value of an investee's net assets are not equal to their fair value, an additional adjustment is required under the equity method of accounting for investments.

Question

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Under the equity method, if the book value of the investee's net assets differs from their fair value, adjustments are made to account for the investor's share of the difference, typically through amortization of the excess or deficit over the useful life of the underlying assets.

If the Book Value of an Investee's Net Assets Are