Under the Equity Method, If an Equity-Method Investment Is Sold

question 159

Multiple Choice

Under the equity method, if an Equity-method Investment is sold at a gain, the gain is:

• A)reported as operating revenue on the income statement.
• B)reported on the balance sheet as an adjustment to accumulated other comprehensive income.
• C)reported in the Other revenue and gain section of the income statement.
• D)reported as Other comprehensive income on the statement of comprehensive income.

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Definitions:

Non-Operating Activities

Transactions and events that are not related to the primary operations of a business, such as investment income or losses from the sale of assets.

Asset Disposals

The process of getting rid of an asset through sale, trade, or removal, often because it's obsolete, no longer needed, or to gain cash.

Interest Expense

The cost incurred by an entity for borrowed funds, represented as the interest payable on any type of debt.

Casualty Losses

Financial losses resulting from sudden, unexpected, or unusual events such as accidents, natural disasters, or vandalism.