What is the distinguishing feature of a joint arrangement? A joint venture? How are joint ventures accounted for?
Answer to relevant QuestionsHow is fair value estimated?Equity income, and consolidated income, is usually lower than one would predict by simply adding the investor’s income and the pro- rata share of the investee’s income. Why does this happen?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. ...On 30 June 20X2, King Limited purchased 10,000 shares of Prince Inc. for $ 12,000 plus $ 1,000 in commission. In 20X2, the company received a $ 500 of dividends, and the shares had a fair value of $ 16,000 at the end of the ...New Company purchased $ 600,000 of Old Corporation 5.5% bonds, classified as an AC investment. The bonds pay semi- annual interest each 30 June and 31 December. The market interest rate was 5% on the date of purchase. The ...
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