Is there a difference between the Equity method when a company is buying less than 30%...
Is there a difference between the Equity method when a company is buying less than 30% stake in another company vs. the Equity method when a company has purchased more than 50% of another company. Are those two different things? Please explain in detail.
Homework Answers
Ans:-
Equity method of Accounting is used by investing company when they have a significant influence on other entity means the company had an invest of 20% to 50% in investee company. As per equity method the investor records such investments as an asset on its balance sheet. The investor's proportional share of the associate company's net income increases the investment (and a net loss decreases the investment), and proportional payments of dividends decrease it. In the investor’s income statement, the proportional share of the investor’s net income or net loss is reported as a single-line item.
When company holds 50% or more investments in a company it must record its investment in the subsidiary using a consolidation method. All revenue, expense, assets, and liabilities of the subsidiary would be included on the holding company financial statements
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Is there a difference between the Equity method when a company
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investment. The difference between book value of equity acquired
and the value implied by the purchase price was attributed solely
to an excess of market over book values of depreciable assets, with
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