Jones Company owns a 25 percent interest in shares of Sandridge Company common stock. Under what circumstances might Jones decide that the equity method would not be appropriate to account for this investment?

Western Die-Casting Company holds an investment in unsecured bonds of LGB Heating Equipment, Inc. When the investment was acquired, management’s intention was to hold the bonds for resale. Now management has the positive intent and ability to hold the bonds to maturity. How should the reclassification of the investment be accounted for?

HOW DOES A COMPANY REALLY DECIDE WHICH INVESTMENT METHOD TO APPLY? Pilgrim Products, Inc., buys a controlling interest in the common stock of Crestwood Corporation. Shortly after the acquisition, a meeting of Pilgrim's accounting department is convened to discuss the internal reporting procedures required by the ownership of this subsidiary. Each member of the staff has a definite opinion as to whether the equity method, initial value method, or partial equity method should be adopted. To resolve this issue, Pilgrim's chief financial officer outlines several of her concerns about the decision. I already understand how each method works. I know the general advantages and disadvantages of all three. I realize, for example, that the equity method provides more detailed information whereas the initial value method is much easier to apply. What I need to know are the factors specific to our situation that should be considered in deciding which method to adopt. I must make a recommendation…

When an investor owns 20% to 50% of the voting stock of an investee company, the investor is presumed to exercise significant influence over the investee unless there is evidence to the contrary. Describe some factors that could be evidence of significant influence? Describe some factors that could be evidence of a lack of significant influence

Highpoint owns a 95 percent majority voting interest in Middlebury. In turn, Middlebury owns an 80 percent majority voting interest in Lowton. In the current year, each firm reports the following income and dividends. Separate Company income figures do not include any investment or dividend income.In addition, in computing its income on a full accrual basis, Middlebury's acquisition of Lowton necessitates excess acquisition-date fair value over book value amortizations of $25,000 per year. Similarly, Highpoint's acquisition of Middlebury requires $20,000 of excess fair-value amortizations. Required Prepare an Excel spreadsheet that computes the following: 1. Middlebury's net income including its equity in Lowton earnings. 2. Highpoint's net income including its equity in Middlebury's total earnings. 3. Total entity net income for the three companies. 4. Net income attributable to the noncontrolling interests. 5. Difference between these elements: • Highpoint's net income. • Total…