Under the equity method, the investor records its share of the associate's net income in the year in which it is earned.

Question

Quizplus · Accepted Answer

In the equity method, the investor records its share of the associate's net income in the year in which it is earned. This is because the investor is considered to have significant influence over the associate and is therefore able to exert control over its operations and financial decisions. As a result, the investor's financial statements must reflect its share of the associate's income in the period in which it is earned.

Under the Equity Method, the Investor Records Its Share of the Associate's