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When determining the accounting treatment for an investment, a reporting entity generally follows a hierarchy under which consolidation accounting is considered first, equity method of accounting second, derivative accounting third, and the classification and subsequent measurement model is considered fourth. If a reporting entity is subject to specialized industry accounting guidance, that guidance should also be considered.
This section describes the accounting for investments in securities held by enterprises in all industries, except not-for-profit organizations and enterprises with specialized accounting practices that measure substantially all investments in debt and equity securities at fair value with the change in fair value recognized in earnings, or in changes in net assets, such as brokers and dealers in securities, defined benefit pension plans and investment companies. This section does not apply to investments in consolidated entities, investments in equity securities or alternative investments accounted for under the equity method including certain limited partnerships and limited liability companies. See PwC's Consolidation and equity method of accounting guide for information on these investments. Hedging of investments is discussed in PwC's Derivative instruments and hedging activities guide.
For information on ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity (CFE) see FV 6.2.7. Disclosures pertaining to the measurement alternative discussed in ASU 2014-13 are addressed in FSP 20.

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