Question

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Companies often invest in the common stock of other corporations. The way we report these investments depends on the nature of the investment and the investor's motivation for the investment. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: 2. What is the specific citation that describes how to account for a change in the level of ownership to a percentage that will mandate use of the equity method for investments in common stock? Section Paragraph Requirement Topic Sub topic 1

Answer 1

Explain the specific citation for the change from cost method to equity method: The specific citation that describes the guidelines for the changes in the cost method for investment in the common stock is FASB ACS 323-10-35-33. The investments-Equity method and joint venture will increase the level of ownership or degree of influence. 1) S.no Topic Sub-topic Section Paragraph The investments-Equity method Investments in Cost and equity FASB ACS 323- and joint venture will increase the common stock method 10-35-33 level of ownership or degree of influence.