Companies often invest in the common stock of other corporations. The way we report these investments depends on the nature of the investment and the investor;s motivation for the investment. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles.

1. Obtain the relevant authoritative literature on accounting for a change from the cost method to the equity method for investments in common stock using the FASB Accounting Standards codification website.
2. What is the specific citation that describes how to account for a change from the cost method to the equity method for investments in common stock.
3. What are the specific requirements?

The specific citation that describes the guideline for how to account for a change from the cost method to the equity method for investments in common stock is FASB ACS 323-10-35-33:

Investments-Equity method and joint ventures-overall-subsequent Measurement-increase in level of ownership or degree of influence

Requirement 3

An investment in common stock of an investee that was previously accounted for on other than the equity method may become qualified for use for the equity method by an increase in the level of ownership(that is,acquisition of additional voting stock by the investor,acquisition or requirement of voting stock by the investee,or other transactions).If an investment qualifies for use of the equity method(That is fall within the scope of this Subtopic)the investor must adopt the equity method of accounting.The investment ,result of operation(current and prior period presented),and retained earnings of the investor must be adjusted retroactively in a manner consistent with the accounting for a step-by-step acquisition of a subsidiary.