InterDigital Inc (IDCC)

[olddog967]

Jim: IDCC’s investments in other companies are accounted for using either the equity or cost methods of accounting.

Under the equity method IDCC is consider a primary beneficiary of the company and records their investment at cost. The amount of the investment is then periodically adjusted by recognizing their share of the earnings or losses of the invested in company. IDCC’s investments in Convida Wireless and the Signal Trust for Wireless Innovation are accounted for under the equity method.

Under the cost method IDCC does not adjust the investment amount when the invested in company reports profit or loss but monitors the investment for an other-than-temporary decline in value. If there is such a decline in value, IDCC adjusts the recorded investment value. According to the latest 10-K, as of 31 Dec 2014, IDCC apparently had written off all previous investments accounted for under this method, and during 2015 made new investments totaling $12.6 million in two companies. One of the companies apparently was XCellAir, but I don’t know who the other is.

From the 10-K:

“During 2015, we made investments in two separate entities for a total of $12.6 million. Due to the fact that we do not have significant influence over either organization, we are accounting for these investments using the cost method of accounting. The carrying value of these investments as of December 31, 2015 was $12.6 million. We had zero long-term investments as of December 31, 2014.”