jarobi04

esandun Wrote:
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> Under cost method 200 is recorded under
> non-current assets in BS.
>
> If it is recorded at fair value
>
> * Initially added to BS at fair value. No goodwill
> is created. For example purchased for 200 and fair
> value of asset at the time of investing is 180, 20
> writes off to IS ( do not recognize 20 goodwill)
>
> *Dividend goes to IS.
>
> * No proportionate income is recognized /added to
> investment value.
>
> * Instead, subsequent fair value, say market
> value, changes are recognized in IS, just like
> HFT.
>
> * Hence, no impairment.
>
> IS = Income statement, BS= Balance sheet
>
> Hope this may help.


This looks correct and logical, almost treating equity investment as HfT.
Was this in the book?