Equity Investments at Cost Flashcards
1
Q
When do you use the cost method?
A
When FV cannot be determinable and NAV is not allowed.
2
Q
How often do you need to do an impairment test of investments held at cost?
A
Annually
3
Q
Can the impairment loss be reversed?
A
No, unless there is a change in an observable transaction of a similar or identical security
4
Q
If there is an impairment, what is the journal entry?
A
Impairment Loss DB
Investment CR
5
Q
If there is a similar transaction which indicates the fair value of your investment held at cost is higher or lower than what you have recorded, how would you adjust?
A
Either a unrecognized gain or loss
