At the beginning of 2018, Pioneer Products’ ownership interest in the common stock of LLB Co. increased tothe point that it became appropriate to begin using the equity method of accounting for the investment. Thebalance in the investment account was $44 million at the time of the change but would have been $56 millionif Pioneer had used the equity method since first investing in LLB. How should Pioneer report the change?Would your answer be the same if Pioneer is changing from the equity method rather than to the equitymethod?
At the beginning of 2018, Pioneer Products’ ownership interest in the common stock of LLB Co. increased tothe point that it became appropriate to begin using the equity method of accounting for the investment. Thebalance in the investment account was $44 million at the time of the change but would have been $56 millionif Pioneer had used the equity method since first investing in LLB. How should Pioneer report the change?Would your answer be the same if Pioneer is changing from the equity method rather than to the equitymethod?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of 2018, 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 since first investing in LLB. 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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