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Do you agree with the change and recognize

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Question - VV bought $20 million in equity securities from J Company. The investment is 19% of the voting common stock of the J Company, but the CFO of J company is selected from VV. VV has impact on the J Company's decision-making. VV uses an equity approach to record this investment. The balance of the J company investment in December 2021 is $20 million. Some managers argue that the impact is not significant and want to change the accounting approach to use fair value and recognize the investment gains. The J Company has zero net income in 2021, but its stock price has increased to $21.4 million. Do you agree with the change and recognize the $1.4 million gains? Create a journal entry for this?

Reference no: EM133055039

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