A At present, A. generally accepted accounting principles (GAAP) recognize three different approaches to the financial B. trading securities reporting of investments in corporate equity securities including the fair-value method, the consolidation of C. significant financial statements and the equity method. D. equity method 4 Equity securities held for sale in the short term are E. voting stock classified as and reported at fair value, with unrealized gains and losses included in F. accrual method earnings. G. goodwill To provide objective reporting for investment with H.other comprehensive income (OCI) influence, FASB ASC Topic 323, 1. impairment Investments - Equity Method and Joint Ventures," describes the use of the equity method. J. intra-entity 4 The rationale underlying the is that an investor begins to gain the ability to influence the decision making process of an investee as the level of ownership rises. If an investor holds between 20 and 50 percent of the of the investee, significant influence is normally assumed and the equity method is applied. The investor's investment account increases as the investee earns and reports income. Also, the investor recognizes investment income using the 4 Any extra payment that cannot be attributed to a specific asset or liability is assigned to the intangible asset is defined as revenues, expenses, gains, and losses that under generally accepted accounting principles are included in comprehensive income but excluded from net income. When a permanent decline in an equity method investment's value occurs, the investor must recognize loss and reduce the asset to fair value. an