Question

Robert Company properly applies the equity method to its investment in Margit Corporation, At the end of the current year, the fair value of Robert Company's investment increased. Robert Company should

Answer 1

Do nothing

Step-by-step explanation:

The value of the investment would be increased by taking the their share of net income and reducing the value of investment by dividends received by the ordinary shares holder (Company). This means that the equity method doesn't includes fair value method in valuing the Investments.

So Robert Company can't increase the the investment value if the fair value of the investment has change as it will be considered a change in policy and change in policy would have a retrospective effect.