Investments

Question 1

What indicates significant influence?

Answer 1

Ownership of 20-50% of the voting shares of a stock.

Question 2

Identify the three major equity method items recognized each period by an investor.

Answer 2

1. Share of investee’s net income/loss;
2. Share of investee’s dividends declared;
3. Adjustment to share of investee’s net income/loss for “depreciation/amortization” of amount allocated to excess of fair value over book value.

Question 3

Which type of investment is reported at amortized cost?

Answer 3

Held to maturity