Explain how equity securities having significant influence are accounted for and reported in the financial statements. Include a discussion of the criterion for these securities in terms of an investee's voting stock.
What will be an ideal response?
The equity method of accounting for securities is used when an investor has a significant influence over an investee. Significant influence is presumed to exist when an investing company owns 20% or more of the investee's voting stock, but not more than 50% ownership. The initial investment is recorded at cost. The equity method requires that an investor record its share of the investee's earnings with a debit to the investment account and a credit to earnings from long-term investment. Cash dividends received increase the cash account and reduce the balance of the investment account by the same amount.
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a. Flexibility b. Delivery cost c. Product support d. Empathy
________ formulated the law of effect.
A. Peter Drucker B. Abraham Maslow C. Michael Porter D. Russell Lincoln Ackoff E. Edward Thorndike
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