Question: A company has been using the equity method to account for its investment. The company sells shares and does not continue to have significant influence.

A company has been using the equity method to account for its investment. The company sells shares and does not continue to have significant influence. Which of the following statements is true?

A prospective change in accounting principle must occur.

Future dividends will continue to reduce the investment account.

The investor will not receive future dividends from the investee.

A retrospective change in accounting principle must occur.

A cumulative effect change in accounting principle must occur.

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