ACC 401 – Advanced Accounting
“Equity Method of Accounting” Please respond to the following (ONE PARAGRAPH ONLY):
· 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.