Equity Method
Response to the following :
The most common method of accounting for unconsolidated subsidiaries is the equity method.
Required
Answer the following questions with respect to the equity method
1. Under what circumstances does a company apply the equity method?
2. At what amount does a company record the initial investment and what events subsequent to the initial investment (if any) change this amount?
3. How does a company recognize investment earnings under the equity method, and how does it determine the amount?