investments accounted for using equity method method, equity, someone, examples, only

nixie24

What is meant by "equity method"? When I think of investments I think of stocks, bonds, land, PPE. Can someone give a couple of examples of "investments accounted for using equity method"? I assume the equity method is for the stocks only?

RobertA

Equity method is for accounting for equity investments in other companies.

Bluetick1010

this is not on level 1

bapswarrior

cfagoal, this is in level 1.

bunky, go to the last chapter in book 3 (the one on differences b/w IFRS and GAAP). You will find an LOS on this in there. I have already forgotten what it is, but I think you basically just include a pro rata share of a subsidiarys income in your statements or something. However a very clear definition is given in there, just read.

Penny-wenny

oh? I thought you just had to define it not actually calculate it. Never showed up as a question in any of the test

scr879

cfagoal, I don't remember any LOS requiring us to calculate it. Although we do need to know what it is.

bunky, one more thing. I think any investment in a company can be accounted for under equity method (dont think that applies to PPE) because whether or not you use the equity method depends on how much % of the investee company you are controlling