An equity investment may be accounted for using the equity method if the investor has significant influence over the investee. Significant influence is indicated by ownership of More than 50% More than 70% At least 10% From 20 to 50%

An equity investment may be accounted for using the equity method if the investor has significant influence over the investee. Significant influence is indicated by ownership of More than 50% More than 70% At least 10% From 20 to 50%

Name: An equity investment may be accounted for using the equity method ift
Uploaded: 2024-03-04T10:43:15.000Z
Channel: Bartleby
Description: An equity investment may be accounted for using the equity method ifthe investor has significant influence over the investee. Significantinfluence is indicated by ownership ofMore than 50%More than 70%At least 10%From 20 to 50%

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 12MC: The cost of equity is _______. A. the interest associated with debt B. the rate of return required...

See similar textbooks

Similar questions

what is evaluate the accounting for investments when holding between 20 and 50% of equity securities of an investee from the view of an analyst of financial statements?
Equity method: Beginning investment + (Ownership percentage x Investee net income) - _________ = Ending Investment Question 1 options: Common Stock Stockholder's Equity Cash Dividends
Which of the following stock investments should be accounted for using the fair value method? a.investments between 20% and 50% ownership b.investments of less than 20% ownership c.investments of over 50% ownership d.all investments of less 50% ownership
Significant influence is normally presumed to exist if the investor owns at least a certain percentage of the investeecompany's ordinary shares. This percentage is_____.Select one:a.10%b.50%c.51%d.20%
The Equity Method of accounting for investments: a) Requires the investment asset to increase proportionally with the affiliates net income b) Requires the investment asset to decrease proportionally with the affiliates net loss c) Requires the investment asset to decrease proportionally with dividends received d) All of the above
31- Which of the statements formulated below explains the method of calculating profit/loss through equity comparison? a) Profit/Loss = Beginning Equity + End of Period Equity / 2 B) Profit/Loss = Beginning Equity + End of Period Equity NS) Profit/Loss = Equity at the Beginning of the Period - Equity at the End of the Period D) Profit/Loss = End of Period Equity - Beginning Equity - Values Added by Partners + Values Withdrawn by Shareholders TO) Profit/Loss = End of Period Equity -Equity at the Beginning of the Period
71 For which type of investments would unrealized holding gain or loss be recorded directly in an owner’s equity account? Group of answer choices Debt investment at amortized cost Equity investment at fair value through OCI Investment in associates Equity investment at fair value through P&L
For investments in equity securities, which will result in recording income based on the income of the investee? Select one: a. Held-to-maturity classification b. Trading classification O C. Available-for-sale classification O d. Equity method of accounting
The sale of a short-term equity investment includes a debit to Multiple Choice Short-term investments Gain on sale of short-term investment Long-term equity investments Cash All of these
Stockholders' equity consists of which of the following? Multiple Choice Paid-in (or contributed) capital and retained earnings. Retained earnings and cash. Long-term assets. Paid-in (or contributed) capital and par value. Premiums and discounts. k
Choose the letter of the correct answer: 1. In which of the following situations would an investor likely account for stock ownership in an investee using the equity method? A. The investor and the investee have many transactions with each other B. The investor owns 15 percent of the investee’s stock C. The investor and investee reside in close proximity to each other D. The investor has significant influence over the investee’s management policies 2. When the cost model/method is used to account for an investment, which of the following would not result in an adjustment to the amount recorded in the investment account? A. The investee declares a regular dividend B. The investor sells some of the stock C. The investee declares a liquidating dividend D. The stock’s market value decreases to a point where is it below the investor’s cost
a. Define the equity method b. Use the following example to describe the equity method Presume that Company A bought 30% of Company B’s outstanding common stocks at $400,000 (cash) on 01/01/2020 During 2020, Company B earned net income of $200,000 and paid dividends of $40,000 Provide the journal entries for this equity investment in fiscal year 2020 What is the balance for this equity investment on 12/31/2020? Explain why the accounting numbers obtained using the equity method are misleading