The text lists general rules for accounting for long-term investments in the voting shares of another corporation. However, the management of the investing company may decide that, in their judgment, the rules do not apply in a particular situation.
Required
1. Identify a situation where an investing company that owns less than 20 percent might believe that the equity method was appropriate.
2. Identify a situation where an investing company that owns between 20 percent and 50 percent might believe that the fair-value method was appropriate.
3. Identify a situation where an investing company that owns more than 50 percent might believe that the fair-value method was appropriate.