Under the equity method, a stock purchase is recorded at its original cost and is not adjusted to fair market value each accounting period.

Question

Quizplus · Accepted Answer

Under the equity method, the initial cost of the investment is recorded and subsequent adjustments for the investor's share of the investee's earnings or losses are made through earnings from the investment. The investment is not adjusted to fair market value each accounting period.

Under the Equity Method, a Stock Purchase Is Recorded at Its