The Equity Method of Accounting for an Investment in an Associate

Multiple Choice

The equity method of accounting for an investment in an associate includes which of the following steps?
I II III IV
Recognise the initial investment at cost Yes Yes No No
Recognise the initial investment at fair value Yes No Yes No
Reduce the carrying amount by any dividends No Yes No Yes
Adjust the carrying amount by the investor's
Share of the associate's profit or loss No Yes Yes No

A) I
B) II
C) III
D) IV