Another investment of Sound is its $45\%$ interest in Pits Mining Corporation $($Pits$).$ This investment was

the outcome of a takeover attempt by Sound two years ago. Sound was frustrated in its attempt by a

coalition of other companies in the extraction industry, which effectively blocked Sound$$s bid for

control. Sound was left with the $45\%$ interest that it had managed to acquire. Although Sound$$s block of

Pits shares is by far the largest single block, Sound has not been able to gain representation on the Pits

board of directors. Sound has instituted court action against Pits to force the other shareholders to

admit Sound nominees to the board

Discuss the manner in which Sound should account for this investment when issuing its annual

financial statements. Specify what additional information you would like to have, if any. Recommend an

accounting approach for this investment, stating any assumptions that you made in arriving at your

recommendations.