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    Define the equity method and determine when it is used

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    What is the equity method? When is it used? Identify the journal entries.

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    Equity Method:

    In the Equity method of accounting of investment, the investment is initially recorded at cost. The carrying of the investment increases and decreases with its share of income (after the date of investment), dividend declared by another company and so on.

    The following factors should be considered in determining whether the Equity method is ...

    Solution Summary

    Equity method is defined. The uses are provided as well as identified in journal entries.