The most common method of accounting for unconsolidated subsidiaries is the equity method. Answer the following questions with respect to the equity method.

1. Under what circumstances does a company apply the equity method?
2. At what amount does a company record the initial investment and what events subsequent to the initial investment (if any) change this amount?
3. Howdoesacompanyrecognizeinvestmentearningsundertheequitymethod,andhowdoesitdeterminetheamount?
4. No copy and paste