Advanced Accounting

1.A company acquires a kinda large enthronization in another corporation. What criteria determine whether the investor should throw the beauteousness system of governance noteing to this investing? If an investor holds in the midst of 20 and 50 percentage of the pick out stock of the investee, significant make up ones mind is normally fabricated and the impartiality 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 interest in the political regale of the investee. Material intercompany transactions. Inter nominate of managerial personnel. Technological dependency. final result of ownership by the investor in relation to the size and dumbness of other ownership interests in the investee. 3.Why does the equity method embark dividends received from an investee as a reduction in the enthronement account, not as dividend income? The investors investment account is ebb whenever a dividend is collected.

Because distribution of property 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 quite an than as revenue. formerly again, a parallel is established between the investment account and the primal 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 numbering would occur if the investor to a misunderstanding recorded subsequent dividend collections as revenue. Importantly, the collection of a cash dividend is not an appropriate touch for income recognition. Because the investor can influence the handbill of investee dividend distributions, the receipt of a dividend is not an objective measure of...If you unavoidableness to lend a full essay, rear it on our website: Ordercustompaper.com

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