When is the equity method used to account for long-term investments in stocks? a
ID: 2498832 • Letter: W
Question
When is the equity method used to account for long-term investments in stocks?
a)When the investment is between 20 - 50% of the voting stock, regardless of whether or not significant influence can be achieved.
b)When the investment is greater than 50% of the voting stock, regardless of whether or not significant influence can be achieved.
c)When the investment is greater than 50% of the voting stock and significant influence can be achieved.
d)When the investment is between 20 - 50% of the voting stock and significant influence can be achieved.
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When accounting for investments in trading securities, any decline in market value below cost of the investments is reported in which of the following ways?
On the income statement as a realized loss.
On the income statement as an unrealized holding loss.
On the balance sheet as a realized loss.
On the balance sheet as an unrealized holding loss in the stockholders' equity section.
a)On the income statement as a realized loss.
b)On the income statement as an unrealized holding loss.
c)On the balance sheet as a realized loss.
d)On the balance sheet as an unrealized holding loss in the stockholders' equity section.
Explanation / Answer
a) When the investment is between 20-50% of the voting stock and significant influence can be acheived
b) On the income statement as an unrealised holding loss
though unrealise loss in not reported until realised