The equity method causes the balance in the investment account to approximate:

Question

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The equity method accounts for investments in which the investor has significant influence (20-50% ownership) over the investee company by recording the investment initially at cost and subsequently adjusting it for the investor's share of the investee's earnings or losses. Therefore, the balance in the investment account under the equity method approximates the original cost of the investment plus the proportionate share of subsequent undistributed earnings of the investee company.

The Equity Method Causes the Balance in the Investment Account