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Equity Method of Accounting”

  • Determine the fundamental reasons why Financial Accounting Standards Board (FASB) requires a company to use the equity method of accounting for investments. Next, propose two (2) theoretical problems of recognizing equity income that the opponents of the equity method would consider. Provide a rationale for your response.
  • In the role of chief executive officer (CEO) for a midsized company, propose the type of managerial incentives that could influence the company’s percentage ownership in another company. Provide a rationale for your response.