CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Under the equity method, unrealized holding gains (losses) are
A. reported as a separate component of stockholders' equity.
B. part of net income.
C. not recognized.

User Contributed Comments 4

User Comment
danlan2 Holding gains (losses) means gains (losses) for holding to maturity security? Using equity method, net income and dividend are recognized.
tom1980 since unrealized holding gains (losses) may mean the appreciation or depreciation on the investment in the balance, they are not recognaized, neither it does in income statement
sjurrens danlan2: that is because you are referring to REALIZED gains/losses, the question asks about realized.
alex2001 Hello,
I believe that the unrealized values comes from impairment between the book value and market value. If I'm right on the point above, then the answer C has to be the correct because Equity method calculates the value of the investment from Accounting values of NI netted by the Dividends. As a result then, unrealized values cannot exist. Am I wrong?
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