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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

If an investor owns more than 50% of an investee, how is the investment treated on the investors financial statements?

To determine

Equity investment: Equity investments are stock instruments which claim ownership in the investee company and pay a dividend revenue to the investor company.

To describe: The accounting treatment of equity investment, if the investor invests more than 50% in outstanding company

Explanation

Accounting treatment:

  • If an investor owns an equity investment which is more than 50% in the outstanding company of investee company, the investor company would have control on the business operations and decisions of the investee company...

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