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A company acquires a rather large investment in another corporation. What criteria determine
whether the investor should apply the equity method of accounting to this investment?
it depends on the compenhensive market status, country risk, results from risk assesment and business environment in particular company and country.
The acquisition in other corporation would be determined through detailed informations and insights into the target corporation's business plan for the next 5 - 10 years, with detailed breakdown on the revenue and OPEX along with KPI's such as the IRR,NPV and the EXIT value for any investor (existing or onboarding). further the decision can be made based on the implied valuation multiples such as P/E and EV/EBITDA amongst others.
Simply it's depends upon the market information and BOD future forecasting plan. Thanks
