Investor company owns 35% of investee company voting stock and accounts for the investment under the...
Investor company owns 35% of investee company voting stock and accounts for the investment under the equity method. investors share of investees current net loss exceeds the balance in the investment account. investor should in most cases
A. Lower of cost or market, with unrealized gains and losses include in earnings.
B. Fair value, with unrealized gains included in earnings only to the extent of previously recognized unrealized losses unless accounting alternative is elected..
C. Fair value, with unrealized gains and losses included in earnings unless accounting alternative is elected.
D. Fair Value, with unrealized gains and losses included in other comprehensive income unless accounting alternative is elected.
Homework Answers
C. Fair value, with unrealized gains and losses included in
earnings unless accounting alternative is elected.
Investee losses can possibly reduce the carrying value of the
investment account to a zero balance in that case equity method is
to be ceases the fair-value method is subsequently used. Investor
records its share of the loss as loss on investment, which
decreases the carrying value of the investment.
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Investor company owns 35% of investee company voting stock and
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