{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/321/10/#30-initial-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"321","topic_title":"Investments—Equity Securities","subtopic":"321-10","subtopic_title":"Overall","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Equity Securities Previously Accounted for under the Equity Method","paragraphs":[{"citation":"321-10-30-1","para":"30-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_ABAC9445-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If an <a href=\"/glossary/e/#equity-security\" class=\"term\" title=\"Any security representing an ownership interest in an entity (for example, common, preferred, or other capital stock) or the right to acquire (for example, warrants, rights, forward purchase contracts, and call options) or dispose of (for example, put options and forward sale contracts) an ownership interest in an entity at fixed or determinable prices. The term equity security does not include any of the following: Written equity options (because they represent obligations of the writer, not investments) Cash-settled options on equity securities or options on equity-based indexes (because those instruments do not represent ownership interests in an entity) Convertible debt or preferred stock that by its terms either must be redeemed by the issuing entity or is redeemable at the option of the investor.\"><span>equity security</span></a> no longer qualifies to be accounted for under the equity method (for example, due to a decrease in the level of ownership), </span></span> <span class=\"sfragment\" id=\"sfr_ABAC952C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">the security's initial basis </span></span> <span class=\"sfragment\" id=\"sfr_ABAC95ED-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">for which subsequent changes in fair value are measured </span></span> <span class=\"sfragment\" id=\"sfr_ABAC96B9-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">shall be the previous carrying amount of the investment. </span></span> <span class=\"sfragment\" id=\"sfr_ABAC97E0-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Paragraph <a href=\"/asc/323/10/#323-10-35-36\" class=\"xref\">323-10-35-36</a> states that the earnings or losses that relate to the stock retained by the investor and that were previously accrued shall remain as a part of the carrying amount of the investment and that the investment account shall not be adjusted retroactively. </span></span> <span class=\"sfragment\" id=\"sfr_ABAC98CB-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Upon discontinuance of the equity method, an entity shall remeasure the equity security in accordance with paragraph <a href=\"/asc/321/10/#321-10-35-1\" class=\"xref\">321-10-35-1</a> or <a href=\"/asc/321/10/#321-10-35-2\" class=\"xref\">321-10-35-2</a>, as applicable. For purposes of applying paragraph <a href=\"/asc/321/10/#321-10-35-2\" class=\"xref\">321-10-35-2</a> to the investor's retained investment, if the investor identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer that results in it discontinuing the equity method, the entity shall remeasure its retained investment at fair value immediately after it no longer applies the guidance in Topic <a altsource=\"GUID-C1DBE130-0C11-41EE-A5D3-44390B444883.ditamap\" class=\"ditamap\">323</a>.</span></span> </div> </div>","snippet":"If an equity security no longer qualifies to be accounted for under the equity method (for example, due to a decrease in the level of ownership), the security's initial basis for which subsequent changes in fair value ar…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d33ac373b9bc8beae58bffd388764736c5d658c327682443ef4b7164ebb38d84","downloaded_from":"2026-09-09T23:38:56.776Z","last_downloaded_at":"2026-09-09T23:38:56.776Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479656","source_sha256":"989936b4baed668185104b963d11d6aa770b1489dfacd85ff21ffd206e279917"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b17c0704dc50bd546ee2644bf976a6fda0af6b23770a52f68e012c2f98ddaa60","downloaded_from":"2026-09-09T23:38:56.776Z","last_downloaded_at":"2026-09-09T23:38:56.776Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479656","source_sha256":"989936b4baed668185104b963d11d6aa770b1489dfacd85ff21ffd206e279917"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ed2de7f7149bfa58a478aec19c4dbd81daa12fd1959319dcbfd5dc59c144d4bd","downloaded_from":"2026-09-09T23:38:56.776Z","last_downloaded_at":"2026-09-09T23:38:56.776Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479656","source_sha256":"989936b4baed668185104b963d11d6aa770b1489dfacd85ff21ffd206e279917"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ed2de7f7149bfa58a478aec19c4dbd81daa12fd1959319dcbfd5dc59c144d4bd","downloaded_from":"2026-09-09T23:38:56.776Z","last_downloaded_at":"2026-09-09T23:38:56.776Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479656","source_sha256":"989936b4baed668185104b963d11d6aa770b1489dfacd85ff21ffd206e279917"}}