When an investment accounted for under the equity method is sold,the gain or loss reported on the income statement is the difference between the selling price and the original cost of the investment.

Question

Quizplus · Accepted Answer

The gain or loss reported on the income statement is the difference between the selling price and the carrying amount of the investment on the investor's books, not the original cost. The carrying amount reflects the investor's share of the investee's earnings and losses, dividends received, and any impairment losses since acquisition.

When an Investment Accounted for Under the Equity Method Is