If a Long-Term Investment Suffers a Permanent Decline in Value,a

question 66

True/False

If a long-term investment suffers a permanent decline in value,a loss only has to be recorded if the investment is sold.

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Definitions:

Cost Method

An accounting method used to value certain investments based on their original purchase cost, without reflecting market value changes until realized.

Economic Interest

A stake or concern in an economic entity or activity, often referring to the level of investment or involvement an individual or organization possesses in a company or project.

Equity Method

An accounting technique used by companies to record their investments in other companies when they have significant influence but not full control.

Cost Method

An accounting approach used to account for investments, where the investment is recorded at its cost and adjustments are made for dividends received or possible impairments.