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Basic Question 8 of 10
Which statement is true?
II. Equity method investments are subject to review for impairment.
I. In the equity method, if there is a difference between the cost of the acquisition and investor's share of the fair value of the net identifiable assets, the difference should be reported as goodwill as a separate item.
II. Equity method investments are subject to review for impairment.
User Contributed Comments 2
| User | Comment |
|---|---|
| vi2009 | I. The definition of goodwill is accurate. What is not true is the part about the reporting ... in the equity method, only 1 line of reporting which is the investment, therefore goodwill is part of the carrying value of the investment. |
| davidt876 | thanks vi |
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Learning Outcome Statements
describe the classification, measurement, and disclosure under International Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments in associates, 3) joint ventures, 4) business combinations, and 5) special purpose and variable interest entities;
distinguish between IFRS and US GAAP in their classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;
analyze how different methods used to account for intercorporate investments affect financial statements and ratios.
CFA® 2025 Level II Curriculum, Volume 2, Module 10.