Question

imagine you are investing in a company having more than 30% of investment and you feel the need to update the accounting books, what accounting approach would you use? your investment is $1 ,illion and accounting year ends on december 31st 2019, the fiar value of the investment goes up to $1.3 million on that date. how would you record in your books?

Answer 1

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Answer:- Summatized the information give in question; Imagine you are investing in a company.... * Accural basis accounting is used + In accural basis accounting recognizes both income and expenses at the time they are easoned or incurred, segoodless of when cash associated with those toansactions, at the year and change in fair value transferred to devaluation reserve account In the given case change in fair value 0.3 million icres (1:3 million - 1 million) transfer to revalieation reseave and the investment is recooded at 1.3 million balance sheet the poor in the