At the beginning of 2016, Pioneer Products’ ownership interest in the common stock of LLB Co. increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $44 million at the time of the change but would have been $56 million if Pioneer had used the equity method and the account had been adjusted for investee net income and dividends. How should Pioneer report the change? Would your answer be the same if Pioneer is changing from the equity method rather than to the equity method?
At the beginning of 2016, Pioneer Products’ ownership interest in the common stock of LLB Co. increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $44 million at the time of the change but would have been $56 million if Pioneer had used the equity method and the account had been adjusted for investee net income and dividends. How should Pioneer report the change? Would your answer be the same if Pioneer is changing from the equity method rather than to the equity method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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At the beginning of 2016, Pioneer Products’ ownership interest in the common stock of LLB Co. increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $44 million at the time of the change but would have been $56 million if Pioneer had used the equity method and the account had been adjusted for investee net income and dividends. How should Pioneer report the change? Would your answer be the same if Pioneer is changing from the equity method rather than to the equity method?
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