Investments in Equity Securities/Equity Method

Question 1

Ownership/influence/accounting method

Answer 1

0%-20%/little to none/FV measurement
20%-50%/significant/Equity or FVO
50%-100%/control/consolidation

Question 2

Measurement alternative w/out a readily determinable FV?

Answer 2

Cost
-impairment
+/- changes resulting from observable price changes for the identical or a smaller investment of the same issuer

Question 3

Significant influence (20-50% influence) should be account for using which method?

Answer 3

Equity, assuming no FVO election

Question 4

Equity method goodwill calculation

Answer 4

cost of investment
-equity in FV of investee’s net assets

Question 5

Equity method dividend

Answer 5

dividend $$ amount*% invested

Question 6

Year end investment measurement

Answer 6

net income% invested(x/12, if less than full year)

Question 7

Equity method balance sheet amount

Answer 7

investment $$
+investment measurement
-equity method dividend

Question 8

Equity method income statement amount

Answer 8

year end investment measurement (net income% invested(x/12, if less than full year))