Abbott Laboratories reports its 50% joint venture investment in TAP Pharmaceutical Products Inc. using the equity...
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Abbott Laboratories reports its 50% joint venture investment in TAP Pharmaceutical Products Inc. using the equity method of accounting in its 2007 10-K. The Abbott balance sheet reports an investment balance of $159 million. TAP has total assets of $1,354.2 million, liabilities of $1,036.7 million, and equity of $317.5 million. Abbott's investment balance is, thus, equal to its 50% interest in TAP's equity ($317.5 million X 50% = $158.75 million, rounded to $159 million). What adjustment(s) might we consider to Abbott's balance sheet before we forecast its financial statements? (Hint: Consider the distinction between operating and nonoperating assets and liabilities.) What risks might Abbott Laboratories face that are not revealed on the face of its balance sheet? Abbott Laboratories reports its 50% joint venture investment in TAP Pharmaceutical Products Inc. using the equity method of accounting in its 2007 10-K. The Abbott balance sheet reports an investment balance of $159 million. TAP has total assets of $1,354.2 million, liabilities of $1,036.7 million, and equity of $317.5 million. Abbott's investment balance is, thus, equal to its 50% interest in TAP's equity ($317.5 million X 50% = $158.75 million, rounded to $159 million). What adjustment(s) might we consider to Abbott's balance sheet before we forecast its financial statements? (Hint: Consider the distinction between operating and nonoperating assets and liabilities.) What risks might Abbott Laboratories face that are not revealed on the face of its balance sheet?
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Answer The main adjustment we might consider is to treat TAP as a separate entity for forecasting pu... View the full answer
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
Posted Date:
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