Explain briefly how the process of consolidation differs when the equity method is used by the parent for recording the investment account as compared to the cost method.
Answer to relevant QuestionsCompany IR owns 30% of Company IE1 and 40% of Company IE2. IE1 sells inventory to IE2 at a profit of $ 20,000. All the goods are still in IE2’s inventory at year-end. By what amount should IR’s equity- basis investment ...What does the equity- basis balance of the investment account for a subsidiary represent (e.g., cost of the investment, market value of the investment, etc.)?Parent Corp. owns 70% of the voting shares of Sub Ltd. During 20X4, Sub Ltd. sold inventory costing $ 640,000 to Parent Corp. for $ 800,000. At December 31, 20X4, Parent Corp. still had $ 300,000 of these goods in its ...On January 1, 20X2, Porter Inc. purchased 80% of the outstanding voting shares of Sloan Ltd. for $ 3,000,000 in cash. On this date, Sloan had common shares outstanding in the amount of $ 2,200,000 and retained earnings of $ ...North Company has supplied you with information regarding two investments that were made during 20X5 as follows:1. On January 1, 20X5, North purchased for cash 40% of the 500,000 shares of voting common shares of Young ...
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