Note: I have got different answers for this so I am very confused. Request you to kindly let me know what is correct and please provide an explanation for part (a) and let me know if I can reach out for some clarifications . Request you to kindly keep me posted
(a) What assets and liabilities of unconsolidated affiliates are omitted from Cummins’ balance sheet as a result of the equity method of accounting for those investments?
Assets are reported at $(2458 +1539) = 3997 million when equity method has been used and $0 as there are none of the liabilities of the investee company. Therefore, $958 million of assets and $ 0 of liabilities of unconsolidated affiliates are omitted from Cummins’ balance sheet as a result of the equity method of accounting for those investments.
(b) Do the liabilities of the unconsolidated affiliates affect Cummins directly?
The liabilities of the investee company are not liabilities for the investor.
Note: I have got different answers for this so I am very confused. Request you to...
Note: I have got different answers for this so I am very
confused. Request you to kindly let me know what is correct and
please provide an explanation for part (a)
E9-36. Analyzing and Interpreting Disclosures on Equity Method Investments Cummins Inc. reports investments in affiliated companies, consisting mainly of investments in nine manufacturing joint ventures. Cummins reports those investments on its balance sheet at $958 million and provides the following financial information on its investee companies in a footnote...
Please help to identify the correct answer because I have got
different answers for this question so I am very confused.
For part a) people have mentioned the omitted assets as $ 958
and then some have mentioned as 2458 + 1539 =3997 and some have
mentioned as 3997 - 958 = 3039 as the omitted assets. Please
clarify and give proper explanation
E9-36. Analyzing and Interpreting Disclosures on Equity Method Investments Cummins Inc. reports investments in affiliated companies, consisting...
E9-36. Analyzing and Interpreting Disclosures on Equity Method Investments Cummins Inc. reports investments in affiliated companies, consisting mainly of investments in nine manufacturing joint ventures. Cummins reports those investments on its balance sheet at $958 million and provides the following financial information on its investee companies in a footnote to its 10-K report. As of and for the years ended December 31 Equity Investee Financial Summary $ millions 2015 2014 2013 Net sales... Gross margin Net income.. $5,946 1,265 $7,426...
a)What assets and liabilities of unconsolidated affiliates are
omitted from Cummins’ balance sheet as a result of the equity
method of accounting for those investments?
b. Do the liabilities of the unconsolidated affiliates affect
Cummins directly? Explain.
For part a) I have solved it but I am a little confused. Please
clarify .
Assets = Current Assets + Non - Current Assets = 2458 + 1539 =
3997. Out of this, 958 million $ of assets are Cummin's share of...
a. What assets and liabilities of unconsolidated affiliates are
omitted from Cummins’ balance sheet as a result of the equity
method of accounting for those investments?
b. Do the liabilities of the unconsolidated affiliates affect
Cummins directly? Explain
c. How does the equity method impact a company's ’ ROE and its
RNOA components (net operating asset turnover and net operating
profit margin)?
for part c-->
Note: My opinion is :
I guess the ROE is unaffected and for the RNOA...
Analyzing and Interpreting Disclosures on Equity Method Investments Cummins Inc. (CMI) reports investments in affiliated companies, consisting mainly of investments in nine manufacturing joint ventures. Cummins reports those investments on its balance sheet at $958 million, and provides the following financial information of its investee companies in a footnote to its 10-K report: Equity Investee Financial Summary As of and for the years ended December 31 $ millions 2015 2014 2013 Net sales $5,946 $7,426 $7,799 Gross margin 1,265 1,539...