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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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How does the equity method discourage the manipulation of net income by investors?

To determine

Concept introduction:

Equity Method:

The Equity method is applied for the accounting for investment in equity shares of a company where the investment has the significant influence over the company. Under this method the share of income earned by the company is recorded by the investor in the investment account and the investment account is decreased by any divided received.

To indicate:

The how the equity method discourage the manipulation of net income by investors.

Explanation

The Equity method is applied for the accounting for investment in equity shares of a company where the investment has the significant influence over the company...

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