Appropriately uses the equity method to account

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Reference no: EM131212361

Katie Co. appropriately uses the equity method to account for its investment in Brent Corp. As of the end of 2011, Brent's common stock had suffered a significant decline in fair value, which is expected to be recovered over the next several months. How should Katie account for the decline in value?

No accounting because the decline in fair value is temporary.

Club should switch to the fair-value method.

Club should decrease the balance in the investment account to the current value and recognize a loss on the income statement.

Club should decrease the balance in the investment account to the current value and recognize an unrealized loss on the balance sheet.

Reference no: EM131212361

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