Question

In: Accounting

Where an investor has discontinued the use of the equity method because the associate has incurred...

Where an investor has discontinued the use of the equity method because the associate has incurred losses, it must disclose the: Reason why it has discontinued the method. Unrecognised share of current period and cumulative losses of the associate. Effect on the statement of changes in equity if it had continued to use the method. Accounting policy it has adopted in place of the equity method.

Solutions

Expert Solution

Where an investor has discontinued the use of the equity method because the associate has incurred losses, it must disclose the
unrecognised share of current period and cumulative losses of the associate.
The Unrecognised share of current period and cumulative losses of the associate must be disclosed if if Equity method is discontinued.
Option B is correct

Related Solutions

When should an investor, applying the “equity method” of accounting for an investment, recognize equity method...
When should an investor, applying the “equity method” of accounting for an investment, recognize equity method income—in the period the investee reports earnings, or in the period the investee declares a dividend?
70 – When the equity method of accounting for investment is used by the investor, the...
70 – When the equity method of accounting for investment is used by the investor, the investment account A cash dividend is received from the investee The investee reports net income for the year The investor records additional depreciation related to the investment The investee reports a net loss for the year. 71- Which of the following investment securities held by Bogey Inc, are not reported at fair value in its balance sheet? Debt securities held as available for sale...
1. How should an investor, applying the “equity method” of accounting for an investment, recognize equity...
1. How should an investor, applying the “equity method” of accounting for an investment, recognize equity method earnings, losses, and dividends declared by an investee? Cite FASB codification to support your answer. 2. Please explain under what circumstances that an investor may not be able to use equity method to account for his investments even though the investor owns more than 20% interest in the investee? Cite FASB codification to support your answer. (Tips: significant influence over an investee).
When the equity method of accounting for investments is used by the investor, the investment account...
When the equity method of accounting for investments is used by the investor, the investment account is increased when:  A cash dividend is received from the investee.       The investee reports a net income for the year.       The investor records additional depreciation related to the investment.       The investee reports a net loss for the year.Assume that, on 1/1/06, Matsui Co. paid $1,200,000 for its investment in 60,000 shares of Yankee Inc. Further, assume that Yankee has 200,000 total shares of stock issued. The book...
In problems where no equity risk premium or tax rate are provided, please use an equity...
In problems where no equity risk premium or tax rate are provided, please use an equity risk premium of 5.5% and a tax rate of 40%. 1. You have been given the following information on a project: • It has a five-year lifetime • The initial investment in the project will be $25 million, Year  % of Depreciable Asset 1         40 2         20 3         14.4 4          13.3 5          13.3 • The revenues are expected to be $20 million next year and to grow 10% a year...
Capitalized costs incurred to develop software for internal use is amortized using which method of amortization.What...
Capitalized costs incurred to develop software for internal use is amortized using which method of amortization.What is the ASC? Which amortization method is recommended?
Please use the percentage of sales method and the ratio method where appropriate to forecast 2018E...
Please use the percentage of sales method and the ratio method where appropriate to forecast 2018E financial statements using the 2017 data. Use formulas to do all calculations of the forecast estimates and use the iteration formula to determine the interest expense and amount of debt at the same time. All assumptions should be included. At the beginning of 2017, Student Copy anticipated a substantial increase in sales. Despite good sales the company experienced a shortage of cash and found...
An institutional investor has 45% of their assets in private investments – private equity and private...
An institutional investor has 45% of their assets in private investments – private equity and private debt. These investments do not trade daily and do not have daily pricing. (Buying and selling these investments is somewhat difficult.) This allocation has allowed them to achieve top performance over the past decade. How is this a challenge to managing their rebalance policy if there is a substantial recession? How could this help or hurt them?
What are the complications intercompany profits create for the use of the sophisticated equity method?
What are the complications intercompany profits create for the use of the sophisticated equity method?
Assume the equity method Equity Investment account relating to a subsidiary has a reported balance of...
Assume the equity method Equity Investment account relating to a subsidiary has a reported balance of $5,310,000, including $270,000 of Goodwill. The fair value of the subsidiary is $4,950,000. The fair value of the subsidiary’s individually identifiable net assets is $4,500,000. The subsidiary has only one reporting unit, which is the same as the overall entity. For this fact set, determine whether Goodwilll is impaired and, if so, the amount of impairment assuming the parent company has previously adopted FASB...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT