Final answer:
To adjust significant influence investments at original cost, the equity method of accounting and impairment of investment are used. Cost/benefit analysis and present discounted value are also important in evaluating such investments.
Step-by-step explanation:
The two things used to adjust significant influence investments (at original cost) are the equity method of accounting and impairment of investment. Under the equity method, investors adjust the value of their investment to reflect their share of the profits and losses of the investee company.
When there’s an indication that an investment has declined in value and is not recoverable, an impairment loss is recognized to adjust the investment to its fair value.Another decision-making process to consider when evaluating investments is cost/benefit analysis.
This involves comparing what will be sacrificed and what will be gained from the investment, weighing marginal costs against marginal benefits. Additionally, present discounted value is a critical analytical tool used to compare the present costs of investment against the present discounted value of future benefits, thus aiding in assessing the viability of investments over time.