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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.

When the Investor Lacks Significant Influence: Fair Value through Net Income

Knowledge Check $01$

What method is used to account for an equity investment in voting stock when the investor lacks significant influence?

Multiple Choice

Amortized cost method

Equity method

Fair value through net income method

Consolidation method