高级财务教材新会计 陈信元 chapter 2.pptVIP

12 Chapter 2 Accounting for Stock Investment additional readings: CAS No.2 1. Fair Value/Cost Method and Equity Method 11. Fair value/Cost method 1) characteristics ? records an investment at cost ? recognizes dividend in excess of earnings are considered as a return of investment (reduction of investment) 2) conditions for cost method ? no ability to influence: 20% ownership test If the stock is marketable, the investment should be accounted for at fair value 12. Equity method 1) characteristics ? initially records an investment at cost ? recognizes the share of the investee’s earnings as i