Chapter 2 Reporting Intercorporate Investment and Consolidation of wholly owned subsidiaries with no differential
Investments are carried at fair value when
The investee does not have significant influence over the investee and the equity securities have readily determinable fair values.
If an investor purchases 40% of an investee's voting shares and this investment provides the investor with significant influence over the investee, the investor would apply with which of the following method to account for the investment
equity method
The equity method of accounting for investments in equity securities is appropriate when
Consolidation is not appropriate and the investor has the ability to exercise significant influence over the investee
Under the fair value method of accounting for investments in equity securities, income is recognized when
Dividends are declared by the investee
Which of the following are true regarding the equity method of accounting for investments in equity securities
Income recognized from the investee is reported as one line in the investor's income statement. The investment is reported as one line in the investors balance sheet It is appropriate when the investor has the ability to exercise significant influence over the investee and consolidation is appropriate.