What is Equity securities measurement alternative?
In short
Equity securities are generally measured at fair value with changes in net income. For those without a readily determinable fair value, a company may instead use cost, less impairment, adjusted for observable price changes in orderly transactions for identical or similar investments.
Key takeaways
- There is no available-for-sale category for equity securities.
- Impairment under the alternative is assessed qualitatively each reporting period.
- Investments accounted for by the equity method or consolidated are outside these rules.
Where it's tested
FAR: Investments (Debt & Equity Securities) — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Following ASU 2016-01, how are most equity securities without significant influence measured?