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Slanted Building Supplies purchased 32 percent of the voting shares of Flat Flooring Company in...

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Accounting

Slanted Building Supplies purchased 32 percent of the voting shares of Flat Flooring Company in March 20X3. On December 31, 20X3, the officers of Slanted Building Supplies indicated they needed advice on whether to use the equity method or to carry the investment at fair value in reporting their ownership in Flat Flooring.

Why might the use of the equity method become more appropriate as the percentage of ownership increases?

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