When an Enterprise Increases Its Interest in an Investment in Equity

question 66

Multiple Choice

When an enterprise increases its interest in an investment in equity securities accounted for by the fair value method,and changes to the equity method,what is the initial carrying value for purposes of subsequent application of the equity method?

• A) Book value at the date of the change
• B) Original cost plus or minus the net market value change since acquisition
• C) Market value at the date of the change
• D) The amount that would be reflected in the investment account had the equity method been in use continually since the purchase of the securities

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Definitions:

Exchange Rate

The price of one country's currency expressed in another country's currency.

Spot Rate

The current market price at which a particular asset can be bought or sold for immediate delivery.

Closing Rate

The spot exchange rate at the end of the reporting period.

Functional Currency

The currency of the primary economic environment in which an entity operates, typically used in its financial reporting.