Diversified Corporation has the following long-term investments:

1. 60 percent of the common stock of Tunis Corporation 2. 13 percent of the common stock of Iron Dale, Inc.

3. 50 percent of the nonvoting preferred stock of Perton Corporation 4. 100 percent of the common stock of its financing subsidiary, DJD, Inc.

5. 35 percent of the common stock of the French company Rue de la Variete 6. 70 percent of the common stock of the Canadian company Nova Scotia Fisheries For each of these investments, tell which of the following methods should be used for external financial reporting, and why:

a. Cost-adjusted-to-market method

b. Equity method

c. Consolidation of parent and subsidiary financial statements LO1