If the Investor sells part of its stake in an Associate, accounted for using the equity method, which method is used to calculate the gain or loss on the sale of these shares?

Question

Quizplus · Accepted Answer

When using the equity method, the carrying value of the investment is adjusted by the investor's share of the earnings or losses of the associate. Therefore, the average carrying value of the investment should be used to calculate the gain or loss on the sale of these shares. FIFO, LIFO, and specific identification methods are used for inventory valuation, not investments in associates.

If the Investor Sells Part of Its Stake in an Associate