Q3. Equity Income is recognized based on the net income of the investee company rather than from Dividends. While this approach may have theoretical merit, what potential problems might this cause for your evaluation of the cash-flow-generating ability of the investor?

Q4. Prior to 2008, CBS Corp. owned approximately 18% of Westwood One, Inc. which managed the CBS Radio Network. CBS, in turn, managed Westwood under a management agreement. Further, one Employee of CBS was a member of Westwoods board of directors. CBS did not control the board of Directors, however. In this situation, how should CBS account for its investment in Westwood One?

Q7. Consider the following scenario: an investor owns 10% of an investee company with publicly traded stock, and licenses technology to the investee for the production of its sole product. None of the investors employees serve in the management of the investee company, nor sit on its board of directors. The license agreement prohibits the investee from certain business activities, such as entering into business arrangements with other companies without the investors consent, using the technology to develop products except as authorized by the investor, and expanding the business into new lines of business without the investors approval. How should the investor account for its investment in the investee company?

Q8. Consider the following scenario: an investor owns 30% of an investee company. The remaining 70% is owned by the investees founder who has managed the company since its inception and takes no direction from outsiders. How should the investor account for its investment?