Acquisitions and Adjustments to Equity Method


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Acquisitions and Adjustments to Equity Method 1 answer below » Big Corporation purchased 10% of Small Corporation on Jan 1, 2012 for 300,000 and classified the investments as an available-for sale security Big acquires and
additional 15 per cent of Small on January 1, 2013 for $450,000 and now Big accounts investment in Small under equity method. Small reports income of $50,000
and $80,000 in 2012 and 2013 respectively and pays dividends of $$20,000 in each of these two years. a. How does Big initially determine the income to be reported in 2012 in connection with its ownership of Small? b. What factors should have influence Big in its decision View complete question » Big Corporation purchased 10% of Small Corporation on Jan 1, 2012 for 300,000 and classified the investments as an available-for sale security Big acquires and
additional 15 per cent of Small on January 1, 2013 for $450,000 and now Big accounts investment in Small under equity method. Small reports income of $50,000
and $80,000 in 2012 and 2013 respectively and pays dividends of $$20,000 in each of these two years. a. How does Big initially determine the income to be reported in 2012 in connection with its ownership of Small? b. What factors should have influence Big in its decision to apply the equity method in 2013 c. In comparative statements for 2012 and 2013 how would Big determine the income to be reported in 2012 in connection with its ownership of Small? Why is this
accounting appropriate? View less » Dec 06 2013 05:00 PM

Answer

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