Question: How does the equity method distort earnings? Income is recognized even though cash may never be received. Equity earnings are recorded even if the investor

How does the equity method distort earnings?

Income is recognized even though cash may never be received.

Equity earnings are recorded even if the investor cannot exercise influence over the investee's policies.

Equity earnings are only recorded on a cash basis of accounting.

Equity earnings are recorded when investment ownership is 100%.

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