When the Equity Method Is Used to Account for a Long-Term

Multiple Choice

When the equity method is used to account for a long-term investment in stock of another company,the carrying value of the investment is affected by

A) declines in the market value of the stock.
B) the earnings and dividends of the investee.
C) an excess of market price over cost.
D) neither the earnings nor the dividends of the investee.