Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

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Answer 1

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Chapter 13, Problem 24GI

a.

To determine

Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

b.

To determine

Explain the suitable accounting treatment to be used when an investor using the equity method sells enough common stocks so that its portion of ownership falls below 20%.

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Lark Industries incurs annual fixed costs of $90,000. Variable costs for Lark’s product are $50 per unit, and the sales price is $75 per unit. Lark desires to earn an annual profit of $45,000. Use the contribution margin ratio approach to determine the sales volume in dollars and units required to earn the desired profit.

Answer 2

Question

Chapter 13, Problem 24GI

a.

To determine

Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

b.

To determine

Explain the suitable accounting treatment to be used when an investor using the equity method sells enough common stocks so that its portion of ownership falls below 20%.

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Answer 3

Question

Chapter 13, Problem 24GI

a.

To determine

Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

b.

To determine

Explain the suitable accounting treatment to be used when an investor using the equity method sells enough common stocks so that its portion of ownership falls below 20%.

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Answer 4

Question

Chapter 13, Problem 24GI

a.

To determine

Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

b.

To determine

Explain the suitable accounting treatment to be used when an investor using the equity method sells enough common stocks so that its portion of ownership falls below 20%.

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Answer 5

Chapter 13, Problem 24GI

a.

To determine

Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

b.

To determine

Explain the suitable accounting treatment to be used when an investor using the equity method sells enough common stocks so that its portion of ownership falls below 20%.

Answer 6

Chapter 13, Problem 24GI

a.

To determine

Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

Answer 7

Chapter 13, Problem 24GI

a.

To determine

Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

Answer 8

b.

To determine

Explain the suitable accounting treatment to be used when an investor using the equity method sells enough common stocks so that its portion of ownership falls below 20%.

Answer 9

b.

To determine

Explain the suitable accounting treatment to be used when an investor using the equity method sells enough common stocks so that its portion of ownership falls below 20%.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 13 - Prob. 1GI Ch. 13 - Provide brief definitions for the following terms:...Ch. 13 - What are the three categories of investments in...Ch. 13 - Prob. 4GI Ch. 13 - Prob. 5GI Ch. 13 - Identify the accounting methods a company uses for...Ch. 13 - Briefly summarize the accounting for an investment...Ch. 13 - Prob. 8GI Ch. 13 - Prob. 9GI Ch. 13 - Prob. 10GI

Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

Solution Summary: The author explains the appropriate accounting treatment to be used when an investor acquires additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

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Explain the suitable accounting treatment to be used when an investor acquires enough additional common stock during a year to change from accounting for the investment at fair value to using the equity method.

Explain the suitable accounting treatment to be used when an investor using the equity method sells enough common stocks so that its portion of ownership falls below 20%.

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