Advanced Accounting

1.A company acquires a sooner large enthronization in a nonher corporation. What criteria determine whether the investor should founder the legality system of government noteing to this enthronization? If an investor holds in the midst of 20 and 50 percentage of the take stock of the investee, significant regularize is normally fabricated and the justice method applied. 2.What indicates an investors ability to significantly influence the decision-making handle of an investee? Investor agency on the board of directors of the investee. Investor conflict in the political mold of the investee. Material intercompany transactions. Inter reorganise of managerial personnel. Technological dependency. terminus of ownership by the investor in relation to the size and compactness of other ownership interests in the investee. 3.Why does the equity method eternalize dividends received from an investee as a reduction in the enthronization account, not as dividend income? The investors investment account is ebb whenever a dividend is collected.

Because distribution of funds dividends reduces the accommodate value of the investee company, the investor mirrors this change by recording the receipt as a precipitate in the carrying value of the investment preferably than as revenue. formerly again, a parallel is established between the investment account and the vestigial activities of the investee: The reduction in the investees owners equity creates a decrease in the investment. Furthermore, because the investor immediately recognizes income when the investee earns it, double figuring would occur if the investor to a intermission recorded subsequent dividend collections as revenue. Importantly, the collection of a cash dividend is not an appropriate shoot for for income recognition. Because the investor can influence the throwaway of investee dividend distributions, the receipt of a dividend is not an objective measure of...If you unavoidableness to pound a full essay, regularise it on our website: Ordercustompaper.com

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