Learning Objective $12-05$ Demonstrate how to identify and account for equity investments classified for reporting purposes as fair value through net income.

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Investments in equity securities for which the investor lacks the ability to exercise significant influence over the investee are accounted for using a fair value through net income approach. They are reported at their fair values. Holding gains and losses are included in earnings.

Sell the Equity Investment

Knowledge Check $01$

Assume that an equity investment that lacks significant influence is sold. Which of the following would be included in the two entries to record the sale?

Note: Select all that apply.

Check All That Apply

An update of the Fair value adjustment account

An update of the Fair value adjustment account

Removal of the related investment account balances

Removal of the related investment account balances

The total amount of gain or loss that has occurred since the securities were purchased

The total amount of gain or loss that has occurred since the securities were purchased

The amount of the unrealized holding gain or loss that has occurred since the end of the prior accounting period