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rakhi.v
rakhi.v, Bachelor's Degree
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Experience:  Financial & Legal Consultant Graduated in law with Emphasis on Finance - 10 yrs experience
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How would you describe a change that a company makes from

Customer Question

how would you describe a change that a company makes from the equity method to the fair value method of accounting for investments?
Submitted: 10 months ago.
Category: Single Problem
Expert:  rakhi.v replied 10 months ago.

Dear Friend,

Hello and welcome. Thank you for providing me an opportunity to assist you.

Normally when a company changes from equuity method to the fair value method of accounting, most probably it is done when the owner ship interest gets 20

Expert:  rakhi.v replied 10 months ago.

Dear Friend,

Hello and welcome. Thank you for providing me an opportunity to assist you.

Normally when a company changes from equity method to the fair value method of accounting, most probably it is done when the owner ship interest gets 20% or lower.

The ownership of less than 20% creates an investment position carried at fair market value in the investor's balance sheet. Fair market value (FMV) is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market.

It is only this circumstance that usually leads to change from equity method of accounting investments to fair value method.

Expert:  rakhi.v replied 10 months ago.

I am sure this would help.

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