On January 5,2015,Erin Ridge Corp.purchased 28,000 shares of Forest Lawn Inc.common shares for $146,000 plus a broker's fee of $1,000.Forest Lawn Inc.has 50,000 common shares outstanding and has acknowledged the fact that its policies will be significantly influenced by Erin Ridge.The investment should be accounted for as a non-equity investment using the fair value method.

Question

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Since Erin Ridge Corp. purchased a significant portion (28,000 out of 50,000 shares) of Forest Lawn Inc., indicating significant influence over the company, the investment should be accounted for using the equity method, not as a non-equity investment using the fair value method.