Equity securities are:
A)Recorded at cost to acquire them plus accrued interest.
B)Recorded at cost to acquire them plus dividends earned.
C)Recorded at cost to acquire them.
D)Not recorded until dividends are received.
E)Not recorded until interest is received.

Question

Quizplus · Accepted Answer

Equity securities are recorded at cost to acquire them, which includes any transaction costs. Dividends and interest earned on equity securities are recorded separately as income when received. Therefore, options A and B are incorrect because they include accrued interest or dividends in the initial recording of the equity securities. Options D and E are incorrect because equity securities are recorded at the time of acquisition, not when dividends or interest are received.

Equity Securities Are