Under the equity method, if the Investment is sold at a gain, the gain is:

Question

Quizplus · Accepted Answer

If the investment is sold at a gain under the equity method, the gain is reported in the Other Revenue section of the income statement. This is because the equity method recognizes the investor's share of the investee's income as the investee earns it, rather than when dividends are received. Therefore, gains from the sale of investments are not considered operating revenue or gross profit.

Under the Equity Method, If the Investment Is Sold at a Gain