Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the

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Under the equity method, the investor recognizes its share of the earnings based on the investee's financial statements. Therefore, the investor's share of earnings is recognized in the period in which the investee reports its earnings. The other options (selling the investment, investee declaring or paying a dividend) are not necessarily connected to the timing of recognizing earnings under the equity method.

Under the Equity Method of Accounting for Investments, an Investor