Barnum Company owns an investment and uses the equity method of accounting.Under the equity method of accounting,Barnum would decrease the Investment account for the proportionate share of the affiliate's reported net loss.

Question

Quizplus · Accepted Answer

According to the equity method of accounting, the investor decreases its investment account for the proportionate share of the affiliate's reported net loss. This method reflects the investor's ownership percentage in the affiliate and the investor recognizes its share of the affiliate's profits and losses, which affects the investment account.

Barnum Company Owns an Investment and Uses the Equity Method