Why can the equity method of accounting for investments in the voting stock of other companies cause

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Why can the equity method of accounting for investments in the voting stock of other companies cause distortions in net earnings?

(a) Significant influence may exist even if the ownership of voting stock is less than 20%.

(b) Income is recognized where no cash may ever be received.

(c) Income should be recognized in accordance with the accrual method of accounting.

(d) Income is recognized only to the extent of cash dividends received.

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Understanding Financial Statements

ISBN: 9781292101552

11th Global Edition

Authors: Lyn Fraser, Aileen M. Ormiston

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Question Posted: Mar 20, 2024 12:00 AM

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Why can the equity method of accounting for investments in the voting stock of other companies cause

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Understanding Financial Statements

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