Final answer:
To record the sale of an equity investment without significant influence, remove the investment account balances and include the total gain or loss since purchase. An update of the Fair Value Adjustment may be needed, but unrealized gains or losses since the end of the prior period do not typically affect the sale entries.
Step-by-step explanation:
When an equity investment that lacks significant influence is sold, several accounting entries need to be recorded. One of the entries will involve the removal of the related investment account balances. This means taking the original cost of the investment off the company's books. Additionally, the entry should include the total amount of gain or loss that has occurred since the securities were purchased, which reflects the difference between the sale price and the purchase price of the equity.
An update of the Fair Value Adjustment account might be required if the investments were previously reported at fair value through other comprehensive income. Finally, the amount of the unrealized holding gain or loss that has occurred since the end of the prior accounting period will typically be part of the comprehensive income but does not directly affect the entries to record the sale of the investment if the equity was not reported at fair value through other comprehensive income previously.