Equity method: It is an accounting technique generally used by the organization to get the access on profits earned by their investments in the other organizations. Holdings between 20% and 50%: This classification of investments, says that an investor will have more interest or significant interest over the investee company. And an investee company will report its investment using the equity method. To determine whether agree or disagree-When your classmate K believes that equity method is applied with a strict application of the “20%” rule.

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Trial Balance Rocky Mountain Tours Co. is a travel agency. The nine transactions recorded by Rocky Mountain Tours during June 20Y2, its first month of operations, are indicated in the following T accounts: Cash (1) 40,000 (2) 4,000 (7) 13,100 (3) 5,000 (4) 6,175 (6) 6,000 (9) 1,500 Equipment (3) 15,000 Dividends (9) 1,500 Accounts Receivable Accounts Payable Service Revenue (5) 20,500 (7) 13,100 (6) 6,000 (3) 10,000 (5) 20,500 Supplies (2) 4,000 (8) 2,200 Common Stock Operating Expenses (1) 40,000 (4) 6,175 (8) 2,200

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Chapter 17, Problem 18Q

To determine

Equity method: It is an accounting technique generally used by the organization to get the access on profits earned by their investments in the other organizations.

Holdings between 20% and 50%: This classification of investments, says that an investor will have more interest or significant interest over the investee company. And an investee company will report its investment using the equity method.

To determine whether agree or disagree-When your classmate K believes that equity method is applied with a strict application of the “20%” rule.

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Trial Balance Rocky Mountain Tours Co. is a travel agency. The nine transactions recorded by Rocky Mountain Tours during June 20Y2, its first month of operations, are indicated in the following T accounts: Cash (1) 40,000 (2) 4,000 (7) 13,100 (3) 5,000 (4) 6,175 (6) 6,000 (9) 1,500 Equipment (3) 15,000 Dividends (9) 1,500 Accounts Receivable Accounts Payable Service Revenue (5) 20,500 (7) 13,100 (6) 6,000 (3) 10,000 (5) 20,500 Supplies (2) 4,000 (8) 2,200 Common Stock Operating Expenses (1) 40,000 (4) 6,175 (8) 2,200

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