a. Investors in equity securities use the cost, equity, or consolidation method. The equity method is required when significant influence is attained. Consolidation is required when control exists. Explain the difference between the equity method vs. the cost/fair value method in terms of the impact to the investor of (1) income on the income statement and (2) the investment account on the balance sheet.

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The equity method and the costfair value method represent two different approaches for accounting for investments in equity securities each with disti... View the full answer