Bаckgrоund:Between 2011 аnd 2015, Biglаri Hоldings (BH) accumulated a significant оwnership stake in Cracker Barrel Old Country Store (CBRL), eventually exceeding 19.9%. BH repeatedly argued that CBRL underperformed and sought board representation. CBRL, in turn, implemented defensive measures—including a shareholder rights plan (“poison pill”)—to prevent BH from increasing its ownership beyond a specified threshold. Throughout this period, the market closely watched changes in the value of BH’s investment as CBRL’s stock price rose substantially. At the time, BH accounted for its investment in CBRL using the fair value method, even though its ownership was just under the 20% threshold associated with equity-method accounting. BH consistently argued that it should be allowed to account for the investment using the equity method. Assume the following simplified data for BH’s investment in CBRL: BH purchased 4.7 million shares of CBRL for $200 million total. At year-end, the shares trade at $275 million fair value. CBRL reports $150 million of net income during the year. BH owns 19.9% of CBRL’s voting shares. BH has no board seats, and the poison pill prevents increasing ownership further. Required: Using the data above, explain why BH prefers equity method accounting for its investment in Cracker Barrel, even though the income statement effect appears more favorable if fair value method is used.