The Trump Companies Inc. has ownership interests in several public companies. At the beginning of 2011, the

Question:

The Trump Companies Inc. has ownership interests in several public companies. At the beginning of 2011, the company's ownership interest in the common stock of Milken Properties increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $31 million at the time of the change. Accountants working with company records determined that the balance would have been $48 million if the account had been adjusted for investee net income and dividends as prescribed by the equity method.

Required:
1. Prepare the journal entry to record the change in principle.
2. Briefly describe other steps Trump should take to report the change.
3. Suppose Trump is changing from the equity method rather than to the equity method. How would your answers to requirements 1 and 2 differ?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Intermediate Accounting

ISBN: 978-0077400163

6th edition

Authors: J. David Spiceland, James Sepe, Mark Nelson

Question Posted: