Investments accounted for using the equity method are initially recorded at:

Question

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Investments accounted for using the equity method are initially recorded at cost, which is the amount paid to acquire the investment. This cost includes any additional costs incurred to acquire and hold the investment, such as brokerage fees, legal fees, and other expenses directly related to the acquisition of the investment. The equity method requires the investor to adjust the carrying amount of the investment to recognize its share of the investee's net income or loss and other changes in equity. Therefore, the initial recorded amount of the investment is simply the cost of the investment.

Investments Accounted for Using the Equity Method Are Initially Recorded