Final answer:
The carrying amount of an investment in stock accounted for under the equity method is based on the book value of the investment, adjusted for the investor's share of earnings or losses and dividends received from the investee.
Step-by-step explanation:
The carrying amount of an investment in stock accounted for under the equity method is not based on the fair value, the original cost, nor the market value of the investment. Instead, it is based on the book value of the investment. When using the equity method, the carrying amount starts with the original cost of the investment and is then adjusted for the investor's share of the earnings or losses of the investee, as well as dividends received from the investee. This reflects the investor's share of the equity of the investee company.