Because of the acquisition of additional investee shares, an investor can choose to change from the fair-value method to the equity method. Which procedures are applied to effect this accounting change?
Answer to relevant QuestionsRiggins Company accounts for its investment in Bostic Company using the equity method. During the past fiscal year, Bostic reported an extraordinary gain on its income statement. How would this extraordinary item affect the ...How is the unrealized gross profit on intra-entity sales calculated? What effect does an unrealized gross profit have on the recording of an investment if the equity method is applied? Alex, Inc., buys 40 percent of Steinbart Company on January 1, 2010, for $530,000. The equity method of accounting is to be used. Steinbart’s net assets on that date were $1.2 million. Any excess of cost over book value is ...Collins, Inc., purchased 10 percent of Merton Corporation on January 1, 2010, for $345,000 and classified the investment as an available-for-sale security. Collins acquires an additional 15 percent of Merton on January 1, ...On January 1, 2009, Plano Company acquired 8 percent (16,000 shares) of the outstanding voting shares of the Sumter Company for $192,000, an amount equal to Sumter's underlying book and fair value. Sumter pays a cash ...
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