On January I, 2018, Jordan Inc. acquired 30% of Nico Corp. Jordan used the equity method to account for the investment. On January I, 2019, Jordan sold two-thirds of its investment in Nico. It no longer had the ability to exercise significant influence over the operations of Nico. How should Jordan account for this change? 13)

A) Jordan should continue to use the equity method to maintain consistency in its financial statements.

B) Jordan should use the fair-value method for 2019 and future years, but should not make a retrospective adjustment to the investment account.

C) Jordan has the option of using either the equity method or the fair-value method for 2018 and future years.

D) Jordan should report the effect of the change from the equity to the fair-value method as a retrospective change in accounting principle.

E) Jordan should restate the prior years' financial statements and change the balance in the investment account as if the fair-value method had been used since 2018.

Answer rating: 100% (QA)

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