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Equity Method of Investment

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Several years ago, Einstein, Inc bought 40 percent of the outstanding voting stock of Brooks Company. The equity method is appropriately applied. On August 1 of the current year, Einstein sold a portion of these shares.
a. How does Einstein compute the book value of this investment on August 1 to determine its gain or loss on the sale?

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Solution Summary

The solution explains the method of computation of book value as on the date of sale.

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Radhika Lakshmi, MPhil
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  • MPhil, Madurai Kamaraj University
  • MCom, Annamalai University
  • IATA, International Air Transport Association
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