ADVANCED ACCT.,SEL.CH.-W/ACCESS>CUSTOM<
14th Edition
ISBN: 9781307566574
Author: Hoyle
Publisher: MCG
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Chapter 1, Problem 2P
To determine
Introduction: The equity method of accounting is a method where the investment is recognized at cost initially and thereafter accounted for based on the change in the investor’s share in investee net assets. The share in the investee’s profit or loss is included in the investor's profit or loss.
The appropriate reason for the equity method from the given statements.
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All of the following statements are correct, except,
An investor may have significant influence even if it has 15% voting power.
An investor may not have significant influence even if it has more than 20% voting power.
Under the equity method that is used to account for investment in associates, cash dividends are treated as income.
Share dividends do not result to a change in the total equity of the investee.
All of the following statements are correct, except,
a. An investor may have significant influence even if it has 15% voting power.
b. An investor may not have significant influence even if it has more than 20% voting power.
c. Under the equity method that is used to account for investment in associates, cash dividends are treated as income.
d. Share dividends do not result to a change in the total equity of the investee.
When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following statements applies?
The investor should use the equity method to account for its investment unless circumstances indicate that it is unable to exercise "significant influence" over the investee.
The investor must use the fair value method unless it can clearly demonstrate the ability to exercise "significant influence" over the investee.
The investor should always use the equity method to account for its investment.
The investor should always use the fair value method to account for its investment.
Chapter 1 Solutions
ADVANCED ACCT.,SEL.CH.-W/ACCESS>CUSTOM<
Ch. 1 - What advantages does a company achieve when it...Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 4QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 6QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 8QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 14QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8PCh. 1 - Evan Company reports net income of $140,000 each...Ch. 1 - Prob. 10PCh. 1 - Prob. 11PCh. 1 - Prob. 12PCh. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - Prob. 16PCh. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Prob. 23PCh. 1 - Matthew, Inc., owns 30 percent of the outstanding...Ch. 1 - Prob. 26PCh. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - Prob. 30PCh. 1 - Prob. 31P
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