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 company.
D. Both B & C
Homework Answers
Answer. D. Both B and C
As per equity method, if Investors share of Investees current net loss exceeds the balance in the investment account then investor should in most cases recognize a loss equal to the remaining balance in the investment account and maintain a record of any unrecognized losses to be applied against future net income of the invested company.
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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...
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