All of the following statements regarding accounting for stock investments with insignificant influence under U.S.GAAP are true except:
A)When an investor owns less than 20% of voting stock,the investor is presumed to have insignificant influence.
B)Stock investments with insignificant influence are reported at fair value.
C)The investment account equals the acquisition cost plus the share of investee income plus the share of investee dividends.
D)Stock investments with insignificant influence are classified as either short or long term based on managers' intent and the stock's marketability.
E)Any unrealized gain (or loss)from a change in the fair value of stock investments is reported on the income statement.

Question

Quizplus · Accepted Answer

The investment account for stock investments with insignificant influence does not include the share of investee income or dividends. Instead, it is typically recorded at cost or fair value, depending on the specific accounting method applied (e.g., cost method or fair value method). The share of investee income and dividends is accounted for differently, not as adjustments to the investment's carrying amount in this context.

All of the Following Statements Regarding Accounting for Stock Investments