If an investor has significant influence over an investee,but doesn't control the decision that are made,the investor must use the equity method to account for this investment.

Question

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According to the accounting standards, if an investor has significant influence over an investee but does not control its decision-making process, the equity method of accounting should be used to record the investment. This is because the investor's level of influence over the investee warrants accounting for the investment as if there was a joint venture between the two parties, rather than as a passive investment.

If an Investor Has Significant Influence Over an Investee,but Doesn't