Town Co. appropriately uses the equity method to account for its investment in Country Corp. As...
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Town Co. appropriately uses the equity method to account for its investment in Country Corp. As of the end of 2021, Country's common stock had suffered a significant decline in fair value, which is expected to recover over the next several months. How should Town account for the decline in value? Multiple Choice Town should not record its share of Country's 2021 earnings until the decline in the fair value of the stock has been recovered. No accounting because the decline in fair value is temporary. Town should decrease the balance in the investment account to the current value and recognize an unrealized loss on the balance sheet. Town should switch to the fair-value method. Town should decrease the balance in the investment account to the current value and recognize a loss on the income statement. Town Co. appropriately uses the equity method to account for its investment in Country Corp. As of the end of 2021, Country's common stock had suffered a significant decline in fair value, which is expected to recover over the next several months. How should Town account for the decline in value? Multiple Choice Town should not record its share of Country's 2021 earnings until the decline in the fair value of the stock has been recovered. No accounting because the decline in fair value is temporary. Town should decrease the balance in the investment account to the current value and recognize an unrealized loss on the balance sheet. Town should switch to the fair-value method. Town should decrease the balance in the investment account to the current value and recognize a loss on the income statement.
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Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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