Newjohn Company owns stock in several affiliated companies.Investments in some of these affiliates are accounted for as securities available for sale 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 available for sale?

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 securities available for sale 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 available for sale?

Newjohn Company Owns Stock in Several Affiliated Companies