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Jones Company possesses a 25 percent interest in the outstanding voting shares of Sandridge Company.Under what circumstances might Jones decide that the equity method would not be appropriate to account for this investment?

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Jones Company possesses a 25 percent interest in the outstanding voting shares of Sandridge Company.Under what circumstances might Jones decide that the equity method would not be appropriate to account for this investment?

Although the equity method is a generally accepted accounting principle (GAAP), recognition of equityincome has been criticized. What theoretical problems can be brought up by opponents of the equity method? What managerial incentives exist that could influence a firm s percentage ownership interest in another firm?