1. significant influence
Type of Investment?
Debt Securities
Equity Securities
Consolidate
Use
amortized
cost
method
Does
management have
positive intent and
ability to hold to
maturity?
Greater than
50% ownership
of voting stock?
Yes No No
Yes
Does
investor have
significant influence
over investee?
Classify as held-to-
maturity
Use
equity
method
Yes No
Does
security have
readily determinable
fair value?
Use
cost
method
Yes No
Use
fair value
method
Classify as trading
security (current
asset)
Measure and report
at fair value as of
balance sheet date
Include unrealized holding
gains and losses as a part
of earnings of the period
Is the
security held
for current resale?
Yes
Classify as security
available for sale
(current or noncurrent)
Include unrealized holding
gains and losses as a
separate component of
stockholders’ equity
Measure and report
at fair value as of
balance sheet date No