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Term: Accounting -> Equity Method of Accounting
Term:

Equity Method of Accounting

Definition:

Investors cost basis is adjusted up or down (in proportion to the % of stock ownership) as the investee's retained earnings fluctuation; used for long-term investments in equity securities of affiliate where holder can exert significant influence; 20% ownership or greater is arbitrarily presumed to have significant influence over the investee.

Related terms:

Joint Venture

Nominal accounts
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