Accounting for Equity Investments in Entities - An Overview of Cost, Fair Value, Equity Method vs. Consolidation Rules 1 CPE

One way to invest in another entity is through an investor’s purchase of equity shares of an investee.  Proper accounting for these equity investments depends on the extent of ownership and influence that the investor has over the investee.  It also depends on whether the equity securities are readily marketable. 

This course provides an overview of properly accounting for equity investments under the cost method, fair value method, equity method, and the consolidation method. 

Prerequisites

No advanced preparation or prerequisites are required for this course.

Learning Objective

• Discover the proper classification of equity investments in the financial statements per Accounting Standards Codification (ASC) Topics 320, 321, 323, and 810.
• Explore the characteristics that determine the method of initial recognition and subsequent measurement of equity investments in another entity.
• Recognize the impact of recent Accounting Standards Updates (ASUs) to accounting for equity securities.

Last updated/reviewed: March 14, 2024