Under the equity method of accounting for an investment, a year-end decrease in the market value of the shares of the investment is shown as an unrealized loss on the income statement of the investing company.

Question

Quizplus · Accepted Answer

Under the equity method, the investment is recorded at cost and subsequently adjusted for the investor's share of the investee's profits or losses and dividends received. Unrealized gains or losses due to market value changes are not recognized in the income statement.

Under the Equity Method of Accounting for an Investment, a Year-End