GAAP Accounting for Equity Securities
An equity security represents an ownership interest in an entity or the right to acquire or dispose of an ownership interest in an entity at fixed or determinable prices. Equity securities include common stocks and convertible preferred stocks, mutual funds, and exchange traded funds, also known as “ETFs”, partnership interests and investments in limited liability companies, unincorporated joint ventures and forward purchase contracts, and options that are not derivative instruments. Different accounting methods apply, depending on the level of influence and ownership.
This OnDemand Learning session provides an overview of the three accounting methods that may apply to equity securities.