Discussion: "Equity Method of Accounting" Please respond to the following:
• Determine the fundamental reasons why Financial Accounting Standards Board (FASB) requires a company to use the equity method of accounting for investments. Next, propose two theoretical problems of recognizing equity income that the opponents of the equity method would consider. Provide a rationale for your response.
• In the role of chief executive officer (CEO) for a midsized company, propose the type of managerial incentives that could influence the company's percentage ownership in another company. Provide a rationale for your response.