The Investment in Equity Securities Account When the Investor Has

question 63

Multiple Choice

The Investment in Equity Securities account when the investor has insignificant influence is reported on the:

• A)income statement using the equity method.
• B)income statement using the fair value method.
• C)balance sheet using the equity method.
• D)balance sheet using the fair value method.

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Definitions:

Equity Method

An accounting technique used to record investments in associated companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profits or losses.

Book Value

The value of an asset as recorded on the balance sheet, calculated by deducting the accumulated depreciation or amortization from the asset's original cost.

Equity Method

An accounting technique used to record investments in associate companies, reflecting the investor's share of the earnings.