The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the

A) fair value method
B) market method
C) income method
D) equity method

Question

uzair iftikhar · Accepted Answer

Final Answer : D, Explanation :  The equity method is used for accounting for investments in equity securities where the investor has significant influence over the investee (20-50% ownership). Under this method, the investor records its share of periodic net income of the investee on its income statement, increasing or decreasing the carrying value of the investment on the balance sheet. The fair value method is used for investments where the investor has less than 20% ownership and records the investment at its fair value with unrealized gains or losses reflected in the income statement. The market method is not a recognized method of accounting for investments. The income method is a general term used for various methods used to calculate income or earnings.

The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the

A) fair value method
B) market method
C) income method
D) equity method

Definitions

Learning Objectives

Learning Objectives

Related questions

The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is theA) fair value methodB) market methodC) income methodD) equity method

Definitions

Learning Objectives

Learning Objectives

Related questions

The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the

A) fair value method
B) market method
C) income method
D) equity method