Question

Which of the following observations is NOT consistent with the accounting for investments in equity securities where there is no significant influence?

a)	When the securities are remeasured to fair value as of the end of each period, any resulting difference is an unrealized gain or loss to be recognized in income

b)	Changes in the number of investment shares resulting from stock dividends, stock splits, or reverse splits must be formally recorded by the investor

c)	The investor recognizes income from the investment as dividends are declared by the investee

d)	Investments are carried by the investor at fair value

Answer 1

Solution:

Option (D) is Correct Answer
Generally when investor does not have full control over investee and without having any influence over investee under that circumstances Investments will be accounted for using cost method not at fair value.
Therefore Option (d) is not consistent with accounting for investment in equity securities when no significant influence.