Why does the equity method record dividends from an investee as a reduction in the investment account, not as dividend income?
Answer to relevant QuestionsBecause of the acquisition of additional investee shares, an investor will now change from the fair-value method to the equity method. Which procedures are applied to accomplish this accounting change? Evan Company reports net income of $140,000 each year and declares an annual cash dividend of $50,000. The company holds net assets of $1,200,000 on January 1, 2014. On that date, Shalina purchases 40 percent of the ...On January 1, 2013, Pierce, Inc., purchased 15,000 shares of Marion Company for $435,000, giving Pierce 10 percent ownership of Marion. On January 1, 2014, Pierce purchased an additional 30,000 shares (20 percent) for ...On January 1, 2014, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and ...On its acquisition-date consolidated balance sheet, what amount should TruData report as common stock?a. $70,000.b. $300,000.c. $350,000.d. $370,000.On July 1, TruData Company issues 10,000 shares of its common stock with a ...
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