What method is used to value equity securities typically?

Equity securities are typically valued at fair value through net income as per current accounting standards, particularly under the guidance of ASC 321 for equity investments. This method reflects the most relevant and current market values, capturing the economic reality of holding those securities.

Valuing equity securities at fair value provides timely and meaningful information to users of financial statements, allowing them to understand the current value of investments that may fluctuate significantly over time. When equity securities are classified under this method, any changes in fair value are recognized directly in net income, which ensures that financial statements reflect the dynamic nature of these investments.

While other methods like historical cost might provide a baseline value, they do not account for fluctuations in market conditions and can result in outdated information on the balance sheet. Valuing at cost through net income or at published market prices can lead to inconsistencies in reporting. Therefore, using fair value through net income aligns with the principle of providing relevant and timely information about an entity's financial position and performance.