Newjohn Company owns stock in several affiliated companies. Investments in some of these affiliates are accounted for as fair value through net income while some are accounted for using the equity method.
Required:
(1.) What factors determine which method should be used?
(2.) What events are recorded when the equity method is used?
(3.) What events are recorded when the securities are accounted for as fair value through net income?

Question

Quizplus · Accepted Answer

The Answer of Newjohn Company owns stock in several affiliated companies. Investments in some of these affiliates are accounted for as fair value through net income while some are accounted for using the equity method.
Required:
(1.) What factors determine which method should be used?
(2.) What events are recorded when the equity method is used?
(3.) What events are recorded when the securities are accounted for as fair value through net income?

Newjohn Company Owns Stock in Several Affiliated Companies