Impairment of Equity Method Investments
Recognizing Permanent Declines
If an equity method investment experiences an impairment that is considered other than temporary, the carrying amount is written down to fair value, and an impairment loss is recognized.
- Evaluate indicators of impairment.
- Recognize impairment loss if decline is not temporary.
- Reduce carrying amount of investment.
Summary
Impairment accounting ensures investments are not reported above their recoverable value.