Cost/Equity

Question 1

0-20%

Answer 1

Cost method or Marketable Securities, not marketable, use cost

Question 2

20-50%

Answer 2

Equity (One-Line COnsolidation)

Question 3

Changes in Ownership %

Answer 3

Eq to Cost- use cost prospectively, cost to Eq- retrospectively apply the equity method, but only for % you previously owned

Question 4

Fair Value Option

Answer 4

apply to only eligible financial instruments, on specified election date, security by security basis, may be applied to some or all of group of securites

Question 5

Eligible Financial Insturments

Answer 5

recognized financial assets and liabilities, firm commitments that involve only financial instruments or written loan committments

Question 6

An Investment in Preferred stock is classified as?

Answer 6

Trading and AFS if marketable, cost method if not

Question 7

Disclosures for an Equity Method Investment

Answer 7

names of each investee with ownership %, accounting policies for investment in common stock, and the difference between the carrying value of the investment and the entity’s underlying equity in the investee’s net assets.