Intermediate Accounting: Reporting and Analysis, 2017 Update
2nd Edition
ISBN: 9781337116619
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 3C
1.
To determine
Identify the various circumstances under which the equity method is applied by the company.
2.
To determine
Identify the amount that would be recorded as the initial investment by the company and the events subsequent to the initial investment change this amount.
3.
To determine
Identify the manner in which the company recognize the investment under the equity method and the manner in which it determine the amount.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
1. Define comprehensive income. What are the ways companies can present
comprehensive income?
2. How are discontinued operations reported in the income statement?
3. Explain the difference(s) between investments in equity securities classified as current
assets versus those classified as long-term (noncurrent) assets?
4. A summary of the company's significant accounting policies is a required disclosure.
Why is this disclosure important to external financial statement users?
5. Deferred revenues represent liabilities recorded when cash is received from customers
in advance of providing a good or service. What adjusting journal entry is required at the
end of a period to recognize the amount of deferred revenues that were recognized
during the period?
If a company uses the equity method to account for an investment in another company, which of the following is true?
Income is combined proportionate to ownership.
Income to the investing company consists of actual dividends, interest, or capital gains.
All of the investee’s income is included in the investor’s income except for income relating to intra-entity transactions.
Income of the investee is included in the investor’s income but reduced by any dividends paid to the investor.
Which of the following tests restricts the amount of dividends that a corporation may declare?
a. Cash flow test
b. Book value test
c. Solvency test
d. Income to expense ratio test
Chapter 13 Solutions
Intermediate Accounting: Reporting and Analysis, 2017 Update
Ch. 13 - Prob. 1GICh. 13 - Provide brief definitions for the following terms:...Ch. 13 - Prob. 3GICh. 13 - Prob. 4GICh. 13 - Prob. 5GICh. 13 - Briefly summarize the accounting for an investment...Ch. 13 - Prob. 7GICh. 13 - Prob. 8GICh. 13 - Prob. 9GICh. 13 - Prob. 10GI
Ch. 13 - Prob. 11GICh. 13 - Prob. 12GICh. 13 - Prob. 13GICh. 13 - Prob. 14GICh. 13 - Briefly describe how to determine and record the...Ch. 13 - Prob. 16GICh. 13 - Prob. 17GICh. 13 - Prob. 18GICh. 13 - Prob. 19GICh. 13 - How does IFRS categorize minority passive...Ch. 13 - Prob. 21GICh. 13 - Prob. 22GICh. 13 - Prob. 23GICh. 13 - Prob. 24GICh. 13 - Prob. 25GICh. 13 - Prob. 26GICh. 13 - Prob. 27GICh. 13 - What is a fund? Distinguish between a fund and an...Ch. 13 - Prob. 29GICh. 13 - Prob. 30GICh. 13 - On January 1, 2016, Weaver Company purchased as...Ch. 13 - Prob. 2MCCh. 13 - Prob. 3MCCh. 13 - Prob. 4MCCh. 13 - Prob. 5MCCh. 13 - Prob. 6MCCh. 13 - A security in a portfolio of available-for-sale...Ch. 13 - Prob. 8MCCh. 13 - Cash dividends declared out of current earnings...Ch. 13 - Prob. 10MCCh. 13 - Prob. 1RECh. 13 - Prob. 2RECh. 13 - Prob. 3RECh. 13 - Prob. 4RECh. 13 - Prob. 5RECh. 13 - Prob. 6RECh. 13 - Prob. 7RECh. 13 - Prob. 8RECh. 13 - Prob. 9RECh. 13 - Prob. 10RECh. 13 - Prob. 11RECh. 13 - Prob. 12RECh. 13 - Prob. 13RECh. 13 - On January 1, Kilgore Inc. accepts a 20,000...Ch. 13 - Prob. 15RECh. 13 - Prob. 16RECh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Prob. 5ECh. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Prob. 11ECh. 13 - Prob. 12ECh. 13 - Prob. 13ECh. 13 - Prob. 14ECh. 13 - Prob. 15ECh. 13 - Prob. 16ECh. 13 - Prob. 17ECh. 13 - Prob. 18ECh. 13 - Prob. 19ECh. 13 - Prob. 20ECh. 13 - Prob. 21ECh. 13 - Prob. 22ECh. 13 - Prob. 23ECh. 13 - Prob. 24ECh. 13 - Prob. 25ECh. 13 - Prob. 26ECh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5PCh. 13 - Prob. 6PCh. 13 - Trading Securities 8th State Bank prepares interim...Ch. 13 - Available-for-Sale Securities Holly Company...Ch. 13 - Investments in Equity Securities Noonan...Ch. 13 - Available-for-Sale Investments Manson Incorporated...Ch. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 1CCh. 13 - Investments in Securities Cane Company has two...Ch. 13 - Prob. 3CCh. 13 - Prob. 4CCh. 13 - Available-for-Sale Securities The following are...Ch. 13 - Prob. 6CCh. 13 - Prob. 7CCh. 13 - Prob. 8CCh. 13 - Prob. 9CCh. 13 - Prob. 10C
Knowledge Booster
Similar questions
- The method of accounting for subsidiaries where investment income is limited to dividends received is the a. cost method. b. simple equity method. c. investment method. d. sophisticated equity method.arrow_forwardA) Comment on any significant changes in each company in the composition of current assets and current liabilities. Explain. b) Which assets in each company have the most significant investment? Why? c) Are the companies financed primarily with debt or equity? Why?arrow_forwardWhich of the following statements regarding equity is not true? It is defined independently of assets and liabilities. O It includes the retained earnings of the entity. It can be increased by additional contributions by the owners. It is increased by profit.arrow_forward
- Which of the following should be presented in the statement of changes in equity? A. Distributions to owners B. Investments by owners C. Change in ownership interest in subsidiary that does not result in a loss of control D. All of these are presented in the statement of changes in equityarrow_forwardWhich of the following represents an obligation of the company? Liability Asset Owners' Equity Liabilities of its competitorsarrow_forwardAs per IAS 16: PPE, how would you recognize your company’s assets that were acquired with the intention of generating Revenue? Explain how you would treat debtors of business?arrow_forward
- What are the four different methods of accounting for investment? Please concisely explain the four different methods of accounting for investment. Please show the different debits and credits to an investment account under the equity method of accounting. Please concisely explain how the excess investment cost over book value is allocated. When is the intra-entity’s profits recognized on transfers between the investor and investee? What is the controlling interest percentage for a consolidated accounting financial statement? What is the controlling interest percentage for a business combination tax return? what does a “downstream” sale of inventory refer to and when is the profit recognized? What does an “upstream” sale of inventory refer to and when is the profit recognized? What is the difference between accounting under the “partial” equity and “full equity method?arrow_forwardBelow is a list of activities for Jayhawk Corporation.Required: For each activity, indicate whether the transaction increases, decreases, or has no effect on assets, liabilities, and stockholders’ equity.arrow_forward29. Which statement is false? a. The balance sheet of an entity purports to show the true value of the entity b. The balance sheet should show a company's liquidity c. The balance sheet reflects the financial capital of a company d. The balance sheet summarizes the financial position of an entity at a point in timearrow_forward
- How are unusual or infrequent gains or losses reported on a company's income statement?arrow_forwardWhen do companies recognize gains and losses from the extinguishment of debt? Where are the gains and losses disclosed on the income statement?arrow_forwardOwners equity represents which of the following? A. the amount of funding the company has from issuing bonds B. the sum of the retained earnings and accounts receivable account balances C. the total of retained earnings plus paid-in capital D. the business owners/owners share of the company, also known as net worth or net assetsarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT