Assume an investor company purchased 20% of the outstanding voting common stock of an investee. Which of the following statements is false about the financial reporting of the investment in the investors published financial statements? (Ignore any potential effects of intercompany transactions be- tween the investor and the investee.)

1. The investor company can make an irrevocable election to report the Equity Investment at fair value, even if the investor has significant influence over the investee
2. If the investor company has no influence over the investee and no readily determinable fair value exists for the investees common stock, in all years the investor holds the investment it can report the investment at the original cost of the investment
3. If the investor has significant influence, the balance of the investment in investee account will equal 20% of the investees stockholders equity, adjusted for 20% of the unamortized differences between the investees net asset fair values and book values (i.e., for gross differences initially determined as of the date of investment in the investee)
4. If the investor company has no influence over the investee, changes in the market value of the investment in the investee are only recognized in other comprehensive income