Homework Answers
answer: false.
the equity method is applied when an investor or holding entity owns 20–50% of the voting stock of the associate company. The equity method of accounting is used only when an investor or investing company can exert a significant influence over the investee or owned company.
not only 30% even in 20% the investor can use the equity method.
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QUESTION 1 An investor should always use the equity method to account for an investment if...
An investor uses the equity method to account for an investment in common stock. The investor's...
An investor uses the equity method to account for an investment in common stock. The investor's equity in the earnings of the investee is affected by A Change in Fair Cash Dividends Value of the Investee's from Investee Common Stock o o o 3
An investor uses the equity method to account for an investment in common stock. Assume that...
An investor uses the equity method to account for an investment in common stock. Assume that (1) the investor owns less than 50 percent of the outstanding common stock of the investee, (2) the investee company reports net income and declares dividends during the year, (3) the fair value of the investee’s stock is unchanged during the year, and (4) the investee’s net income is more than the dividends it declares. How would the investor’s investment in the common stock...
Question 6 If the cost method is used to account for a long-term investment in common...
Question 6 If the cost method is used to account for a long-term investment in common stock, dividends received should be credited to the Dividend Revenue account. debited to the Stock Investments account. recorded only when 20% or more of the stock is owned. credited to the Stock Investments account. Question 7 If 10% of the common stock of an investee company is purchased as a long-term investment, the appropriate method of accounting for the investment is determined by agreement...
are equity securities in which the investor owns between 20% and 50% of the investee's voting...
are equity securities in which the investor owns between 20% and 50% of the investee's voting stock. 5-Securities are represented by a certificate and are commonly traded on an exchange. • • True False 6-When a company receives interest revenue on a bond investment, total stockholders' equity remains unchanged. • • True False 7-When a company collects the face value of a bond investment at maturity, total assets increase. • • True False 8-Creditors invest in a company and hope...
1-If the Fair Value Adjustment minus Trading account for trading debt investments has a debit balance,...
1-If the Fair Value Adjustment minus Trading account for trading debt investments has a debit balance, it is 2-A preferred stock is an example of a debt security. • True False 3-Equity securities, in which the investor lacks the ability to participate in the decisions of the investee company, are initially accounted for at the lower-of-cost-or-market value. True . False 4- are equity securities in which the investor owns between 20% and 50% of the investee's voting stock. 5-Securities are...
When using the equity method to account for an investment, cash dividends received by the investor...
When using the equity method to account for an investment, cash dividends received by the investor from the investee should be recorded: Multiple Choice As a reduction in the investment account. As an increase in the investment account. As dividend income. As a contra item to stockholders' equity.
Equity method journal entries (price greater than book value) An investor purchases a 30% interest in...
Equity method journal entries (price greater than book value) An investor purchases a 30% interest in an investee company, and the investor concludes that it can exert significant influence over the investee. The book value of the investee's Stockholders' Equity on the acquisition date is $500,000, and the investor purchases its 30% interest for $195,000. The investor is willing to pay the purchase price because the investee owns an unrecorded (internally developed) patent that the investor estimates is worth $150,000....
Question 7 Not yet answered Marked out of 1.00 P Flag question Review of Investment accounting...
Question 7 Not yet answered Marked out of 1.00 P Flag question Review of Investment accounting (noncontrolling Investment in affiliate) Assume an investor company purchased a controlling financial interest in 100% of the outstanding voting common stock of an investee. Which of the following statements is false about the investor's pre-consolidation bookkeeping and/or the post-consolidation financial reporting in the investor's published financial statements? (Ignore any potential effects of intercompany transactions between the investor and the investee) Oin its published financial...
Investor company owns 35% of investee company voting stock and accounts for the investment under the...
Investor company owns 35% of investee company voting stock and accounts for the investment under the equity method. investors share of investees current net loss exceeds the balance in the investment account. investor should in most cases A. Always recognize a loss equal to 35% of investor's net loss. B. Recognize a loss equal to the remaining balance in the investment account C. Maintain a record of any unrecognized losses to be applied against future net income of the invested...
Under the equity method, the investor a) debits the Revenue from Investments when the investee reports...
Under the equity method, the investor a) debits the Revenue from Investments when the investee reports income U b) must debit the Equity Investments account when a dividend is received c) must record its share of the investee's net income o d) must use the LIFO method for tax purposes
An investor uses the equity method to account for an investment in common stock. The investor's equity in the earnings of the investee is affected by A Change in Fair Cash Dividends Value of the Investee's from Investee Common Stock o o o 3
are equity securities in which the investor owns between 20% and 50% of the investee's voting stock. 5-Securities are represented by a certificate and are commonly traded on an exchange. • • True False 6-When a company receives interest revenue on a bond investment, total stockholders' equity remains unchanged. • • True False 7-When a company collects the face value of a bond investment at maturity, total assets increase. • • True False 8-Creditors invest in a company and hope...
1-If the Fair Value Adjustment minus Trading account for trading debt investments has a debit balance, it is 2-A preferred stock is an example of a debt security. • True False 3-Equity securities, in which the investor lacks the ability to participate in the decisions of the investee company, are initially accounted for at the lower-of-cost-or-market value. True . False 4- are equity securities in which the investor owns between 20% and 50% of the investee's voting stock. 5-Securities are...
Equity method journal entries (price greater than book value) An investor purchases a 30% interest in an investee company, and the investor concludes that it can exert significant influence over the investee. The book value of the investee's Stockholders' Equity on the acquisition date is $500,000, and the investor purchases its 30% interest for $195,000. The investor is willing to pay the purchase price because the investee owns an unrecorded (internally developed) patent that the investor estimates is worth $150,000....
Question 7 Not yet answered Marked out of 1.00 P Flag question Review of Investment accounting (noncontrolling Investment in affiliate) Assume an investor company purchased a controlling financial interest in 100% of the outstanding voting common stock of an investee. Which of the following statements is false about the investor's pre-consolidation bookkeeping and/or the post-consolidation financial reporting in the investor's published financial statements? (Ignore any potential effects of intercompany transactions between the investor and the investee) Oin its published financial...
Under the equity method, the investor a) debits the Revenue from Investments when the investee reports income U b) must debit the Equity Investments account when a dividend is received c) must record its share of the investee's net income o d) must use the LIFO method for tax purposes
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