Purchase of an Investment. An investor has just purchased a 15% share in the equity of a private company and has the right to appoint a member to the private company’s 5-member board. The investor is asserting to his auditor that the investment does not qualify for the equity method of accounting since his interest is below 20%. Locate the guidance applicable to this issue and evaluate the strength of the investor’s argument. Identify questions you might ask if you are the investor’s auditor

Answer rating: 100% (QA)

Equity method is used to recording investment in another company investee Equity method is a... View the full answer