What is “one-line consolidation,” and when is it used?
What will be an ideal response?
ANSWER:
If an investor’s ownership is not greater than 50 percent, but the investor can exercise significant influence over op-erating and financial policies, the equity method, or one-line consolidation, is used. With this method, the invest-ment account is used to reflect the investor’s underlying book value of equity in the investee. Many of the mechan-ical adjustments that are required for consolidated finan-cial statements are also required for a one-line consolida-tion—except that only the net effect of those adjustments is reported in the investment account rather than a consoli-dated reporting of all of the individual accounts actually involved. The events that must be recorded in the invest-ment account for each reporting period are: (1) proportion-ate share of investee’s income or loss for the period; (2) proportionate share of investee’s cash dividend for the pe-riod; and (3) amortization of the amount of the cost of the investment that is different from the underlying book value acquired. The result is that one line on the balance sheet, the investment account, and one line on the income state-ment, the income from equity investment account, are re-ported as if consolidation had occurred.
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Discuss how a business can use the concepts of "informers" and "meformers" to build goodwill
What will be an ideal response?
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According to Herzberg, why do job enrichment and job design qualify as motivators and not hygienes?
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