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How does the fair value and equity methods of accounting for investments in stocks subsequent to acquisition differ?
Wiki User
∙ 14y ago
Under the fair value method, investments are originally recorded at cost and are reported at fair value. Dividends are reported as other revenues and gains. Under the equity method, investments are originally recorded at cost. Subsequently, the investment account is adjusted for the investor's share of the investee's net income or loss and this amount is recognized in the income of the investor. Dividends received from the investee are reductions in the investment account.
Wiki User
∙ 14y ago
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