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Business Accounting Advanced Accounting

Equity method: The equity method basically keeps the record of the parent’s ownership interest that is multiplied by the reported net income of the subsidiary. This income will be added to parent’s investment account and the deduction in this method will be of the parent’s ownership interest multiplied by the reported losses of the subsidiary and parent’s ownership interest multiplied by the declared dividends of the subsidiary. All together equals the equity-adjusted balance. Cost method: The cost method basically retains the original cost of acquisition balance in the subsidiary account. As the income is earned by the subsidiary, no adjustments would be made. To calculate: The preparation of statement of determination and distribution of excess schedule for the year end December 31 , 2016 .

Equity method: The equity method basically keeps the record of the parent’s ownership interest that is multiplied by the reported net income of the subsidiary. This income will be added to parent’s investment account and the deduction in this method will be of the parent’s ownership interest multiplied by the reported losses of the subsidiary and parent’s ownership interest multiplied by the declared dividends of the subsidiary. All together equals the equity-adjusted balance. Cost method: The cost method basically retains the original cost of acquisition balance in the subsidiary account. As the income is earned by the subsidiary, no adjustments would be made. To calculate: The preparation of statement of determination and distribution of excess schedule for the year end December 31 , 2016 .

Solution Summary: The author explains the equity method, which keeps the parent's ownership interest multiplied by the reported net income of the subsidiary, and the cost method.

Advanced Accounting

Advanced Accounting

12th Edition

ISBN: 9781305084858

Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng

Publisher: Cengage Learning

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Question

Chapter 3, Problem 10.1E

To determine

Equity method: The equity method basically keeps the record of the parent’s ownership interest that is multiplied by the reported net income of the subsidiary. This income will be added to parent’s investment account and the deduction in this method will be of the parent’s ownership interest multiplied by the reported losses of the subsidiary and parent’s ownership interest multiplied by the declared dividends of the subsidiary. All together equals the equity-adjusted balance.

Cost method: The cost method basically retains the original cost of acquisition balance in the subsidiary account. As the income is earned by the subsidiary, no adjustments would be made.

To calculate: The preparation of statement of determination and distribution of excess schedule for the year end December 31, 2016 .

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Chapter 3, Problem 9E

Chapter 3, Problem 10.2E

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Chapter 3 Solutions

Advanced Accounting

Ch. 3 - Prob. 1UTI Ch. 3 - Prob. 2UTI Ch. 3 - Prob. 3UTI Ch. 3 - Prob. 4UTI Ch. 3 - Prob. 5UTI Ch. 3 - Prob. 6UTI Ch. 3 - Prob. 7UTI Ch. 3 - Prob. 1E Ch. 3 - Prob. 2E Ch. 3 - Prob. 3.1E

Ch. 3 - Prob. 3.2E Ch. 3 - Prob. 3.3E Ch. 3 - Prob. 3.4E Ch. 3 - Prob. 3.5E Ch. 3 - Equity method, second year, eliminations, income...Ch. 3 - Prob. 4.2E Ch. 3 - Prob. 5.1E Ch. 3 - Prob. 5.2E Ch. 3 - Prob. 5.3E Ch. 3 - Prob. 5.4E Ch. 3 - Prob. 5.5E Ch. 3 - Prob. 6.1E Ch. 3 - Prob. 6.2E Ch. 3 - Prob. 7.1E Ch. 3 - Prob. 7.2E Ch. 3 - Prob. 7.3E Ch. 3 - Prob. 7.4E Ch. 3 - Prob. 7.5E Ch. 3 - Prob. 8.1E Ch. 3 - Prob. 8.2E Ch. 3 - Prob. 9E Ch. 3 - Prob. 10.1E Ch. 3 - Prob. 10.2E Ch. 3 - Prob. 10.3E Ch. 3 - Prob. 11E Ch. 3 - Prob. 3B.1.1AE Ch. 3 - Prob. 3B.1.2AE Ch. 3 - Prob. 3B.1.3AE Ch. 3 - Prob. 3B.2.1AE Ch. 3 - Prob. 3B.2.2AE Ch. 3 - Prob. 3B.3AE Ch. 3 - Prob. 3.1.1P Ch. 3 - Prob. 3.1.2P Ch. 3 - Prob. 3.1.3P Ch. 3 - Prob. 3.2.1P Ch. 3 - Prob. 3.2.2P Ch. 3 - Prob. 3.3.1P Ch. 3 - Prob. 3.3.2P Ch. 3 - Prob. 3.3.3P Ch. 3 - Prob. 3.3.4P Ch. 3 - Prob. 3.4.1P Ch. 3 - Prob. 3.4.2P Ch. 3 - Prob. 3.5.1P Ch. 3 - Prob. 3.5.2P Ch. 3 - Prob. 3.5.3P Ch. 3 - Prob. 3.6.1P Ch. 3 - Prob. 3.6.2P Ch. 3 - Prob. 3.6.3P Ch. 3 - Prob. 3.7.1P Ch. 3 - Prob. 3.7.2P Ch. 3 - Prob. 3.7.3P Ch. 3 - Prob. 3.8.1P Ch. 3 - Prob. 3.8.2P Ch. 3 - Prob. 3.9.1P Ch. 3 - Prob. 3.9.2P Ch. 3 - Prob. 3.10.1P Ch. 3 - Prob. 3.10.2P Ch. 3 - Prob. 3.11.1P Ch. 3 - Prob. 3.11.2P Ch. 3 - Prob. 3.12.1P Ch. 3 - Prob. 3.12.2P Ch. 3 - Prob. 3.13.1P Ch. 3 - Prob. 3.13.2P Ch. 3 - Prob. 3.15.1P Ch. 3 - Prob. 3.15.2P Ch. 3 - Prob. 3.16.1P Ch. 3 - Prob. 3.16.2P Ch. 3 - Prob. 3.17.1P Ch. 3 - Prob. 3.17.2P Ch. 3 - Prob. 3.18.1P Ch. 3 - Prob. 3.18.2P Ch. 3 - Prob. 3A.1.1AP Ch. 3 - Prob. 3A.1.2AP Ch. 3 - Prob. 3A.2AP Ch. 3 - Prob. 3A.3AP Ch. 3 - Prob. 3B.1AP Ch. 3 - Prob. 3B.2AP Ch. 3 - Prob. 3B.3.1AP Ch. 3 - The trial balances of Campton Corporation and Dorn...Ch. 3 - The trial balances of Campton Corporation and Dorn...

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