Minority, passive investments are initially recorded at the

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Minority, passive investments are initially recorded at the acquisition cost according to the cost method of accounting. This cost includes the purchase price paid by the investor and any additional costs incurred to acquire the investment, such as brokerage fees or legal expenses. The fair market value of the net assets or the present/future value of cash flows may be considered in certain situations, such as goodwill impairment testing or valuation of certain securities, but it is not the initial recording basis for minority, passive investments.

Minority, Passive Investments Are Initially Recorded at the