Unfair accounting method needs a makeover.

TLDR:

Key points:

• Inequity method of accounting explained
• Implications for financial reporting and analysis

This article discusses the inequity method of accounting, which is a method used to account for investments in companies where the investor has significant influence but not control. The article explains the key features of the inequity method, such as recognizing the investor’s share of the investee’s profits and losses, and the significance of this method for financial reporting and analysis.

Investors using this method must carefully consider and account for their proportionate share of the investee’s financial performance, as this can have a significant impact on the investor’s own financial statements. It is important for investors to understand the implications of using the inequity method and how it can affect their overall financial position and performance.