Investor Limited owns 35% of Machines Limited and has significant influence. The investment was made five years ago, when Machine’s fair values equaled book values; $ 40,000 of goodwill was inherent in the purchase price. Goodwill is not impaired. In the current fiscal year, Machines reported $ 225,000 in income. This includes a $ 50,000 profit on inventory sold to Investor Limited, which Investor has not yet resold. How much investment revenue will Investor report using the equity method?
Answer to relevant QuestionsUnder what circumstances is an investment reclassified from the AC classification to the FVTPL classification? Can an AC investment be classified as FVTOCI? Explain.Bond: On 1 January 20X2, Investor Company purchased $ 1,000,000 of Operating Corporation 5% bonds, classified as an AC investment. The bonds pay semi- annual interest each 30 June and 31 December. The market interest rate ...Consider the following investment categories: A. AC investment B. FVTPL investment C. FVTOCI investmentD. Associate E. Subsidiary F. Joint venture G. Cost An investor company that is a public company has the following items: ...On 1 November 20X8, Porter Company acquired the fol-lowing FVTPL investments: • Minto Corporation— 2,000 common shares at $ 15 cash per share • Pugwash Corporation— 700 preferred shares at $ 25 cash per share The ...On January 1, 20X6, Loffer Limited purchased 35% of Ming’s common shares for a price of $ 575,000. The remainder of the shares in Ming are closely held by family members of the founder of the company. Loffer considers this ...
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