Fair Value Method for Equity Investments (less than 20% ownership stake)

This video shows how to use the Fair Value Method to account for Equity Investments. The Fair Value Method is used when a firm owns less than 20% of the stock of the investee (if the firm owns between 20% and 50% of the investee, it can make an irrevocable election to use the Fair Value Method). The Fair Value Method requires that the investment be marked to market (its fair value) on the Balance Sheet, and that any unrealized gains or losses flow through the Income Statement to affect Net Income. Also, any dividends received from the investee are recorded as dividend revenue, which increases Net Income.— Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: • A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING • A 44-PAGE GUIDE TO U.S. TAXATION • A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS • MANY MORE FREE PDF GUIDES AND SPREADSHEETS eepurl.com/dIaa5z — SUPPORT EDSPIRA ON PATREON *www.patreon.com/prof_mclaughlin — GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT edspira.thinkific.com/ — LISTEN TO THE SCHEME PODCAST Apple Podcasts: podcasts.apple.com/us/podcast/scheme/id1522352725 Spotify: open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc Website: www.edspira.com/podcast-2/ — GET TAX TIPS ON TIKTOK www.tiktok.com/@prof_mclaughlin — ACCESS INDEX OF VIDEOS www.edspira.com/index — CONNECT WITH EDSPIRA Facebook: www.facebook.com/Edspira Instagram: www.instagram.com/edspiradotcom LinkedIn: www.linkedin.com/company/edspira — CONNECT WITH MICHAEL Twitter: www.twitter.com/Prof_McLaughlin LinkedIn: www.linkedin.com/in/prof-michael-mclaughlin — ABOUT EDSPIRA AND ITS CREATOR www.edspira.com/about/ michaelmclaughlin.com/

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