BU387 Lecture Notes - Lecture 7: Equity Method, Book Value, Write-Off
Document Summary
20% - 50%: significant interest equity method c > 50%: controlling interest. Material intercompany transactions/provision of technical information, etc. Increased by the share of the investee"s net income. Decreased by the share of the investee"s dividends. Recognize gain or loss on sale ( other expenses and losses section on i/s) Proceeds carrying amount = gain or loss. Investment account reflects the investor"s equity in the underlying net assets of the investee. To record receipt of dividends from xyz: following the two entries for 2017, the investment account in xyz will reflect the following: On jan. 1, 2017, abc buys 40% of the voting shares of. If the investment is accounted for by the equity method, abc will make the following entries on dec. 31, 2017: To record abc"s share of xyz"s net income: 4,000: following the two entries for 2017, the investment account in xyz will reflect the following: Proportionate share of earnings of investee (,000 40%)
