Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 3, Problem 1Q

To determine

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Expert Solution & Answer

Answer to Problem 1Q

The methods for recording investment are as follows:

Equity method
Initial value method
Partial equity method

Explanation of Solution

Equity method:

The equity method is used when the investor is having the significant influence and the investment balance is reduced by the amount of dividend paid. The method is however best method for accounting of consolidated investments but it is the difficult method to use.

Initial value method:

The dividends are recorded as income under the initial value method. The initial value method differs from the equity method as the dividend is not reduced from the value of the investment.

Partial equity method:

The partial equity method is not that appropriate as the equity method and the fair value method amortizations are accounted under this method.

The partial equity method is however easier than the equity method.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

provide correct answer

Please solve. The screen print is kind of split. Please look carefully.

Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Answer 2

Question

Chapter 3, Problem 1Q

To determine

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Expert Solution & Answer

Answer to Problem 1Q

The methods for recording investment are as follows:

Equity method
Initial value method
Partial equity method

Explanation of Solution

Equity method:

The equity method is used when the investor is having the significant influence and the investment balance is reduced by the amount of dividend paid. The method is however best method for accounting of consolidated investments but it is the difficult method to use.

Initial value method:

The dividends are recorded as income under the initial value method. The initial value method differs from the equity method as the dividend is not reduced from the value of the investment.

Partial equity method:

The partial equity method is not that appropriate as the equity method and the fair value method amortizations are accounted under this method.

The partial equity method is however easier than the equity method.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 3, Problem 1Q

To determine

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Expert Solution & Answer

Answer to Problem 1Q

The methods for recording investment are as follows:

Equity method
Initial value method
Partial equity method

Explanation of Solution

Equity method:

The equity method is used when the investor is having the significant influence and the investment balance is reduced by the amount of dividend paid. The method is however best method for accounting of consolidated investments but it is the difficult method to use.

Initial value method:

The dividends are recorded as income under the initial value method. The initial value method differs from the equity method as the dividend is not reduced from the value of the investment.

Partial equity method:

The partial equity method is not that appropriate as the equity method and the fair value method amortizations are accounted under this method.

The partial equity method is however easier than the equity method.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 3, Problem 1Q

To determine

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Expert Solution & Answer

Answer to Problem 1Q

The methods for recording investment are as follows:

Equity method
Initial value method
Partial equity method

Explanation of Solution

Equity method:

The equity method is used when the investor is having the significant influence and the investment balance is reduced by the amount of dividend paid. The method is however best method for accounting of consolidated investments but it is the difficult method to use.

Initial value method:

The dividends are recorded as income under the initial value method. The initial value method differs from the equity method as the dividend is not reduced from the value of the investment.

Partial equity method:

The partial equity method is not that appropriate as the equity method and the fair value method amortizations are accounted under this method.

The partial equity method is however easier than the equity method.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 3, Problem 1Q

To determine

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Expert Solution & Answer

Answer to Problem 1Q

The methods for recording investment are as follows:

Equity method
Initial value method
Partial equity method

Explanation of Solution

Equity method:

The equity method is used when the investor is having the significant influence and the investment balance is reduced by the amount of dividend paid. The method is however best method for accounting of consolidated investments but it is the difficult method to use.

Initial value method:

The dividends are recorded as income under the initial value method. The initial value method differs from the equity method as the dividend is not reduced from the value of the investment.

Partial equity method:

The partial equity method is not that appropriate as the equity method and the fair value method amortizations are accounted under this method.

The partial equity method is however easier than the equity method.

Answer 6

Chapter 3, Problem 1Q

To determine

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Expert Solution & Answer

Answer to Problem 1Q

The methods for recording investment are as follows:

Equity method
Initial value method
Partial equity method

Explanation of Solution

Equity method:

The equity method is used when the investor is having the significant influence and the investment balance is reduced by the amount of dividend paid. The method is however best method for accounting of consolidated investments but it is the difficult method to use.

Initial value method:

The dividends are recorded as income under the initial value method. The initial value method differs from the equity method as the dividend is not reduced from the value of the investment.

Partial equity method:

The partial equity method is not that appropriate as the equity method and the fair value method amortizations are accounted under this method.

The partial equity method is however easier than the equity method.

Answer 7

Chapter 3, Problem 1Q

To determine

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Answer 8

Expert Solution & Answer

Answer to Problem 1Q

The methods for recording investment are as follows:

Equity method
Initial value method
Partial equity method

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Equity method:

The equity method is used when the investor is having the significant influence and the investment balance is reduced by the amount of dividend paid. The method is however best method for accounting of consolidated investments but it is the difficult method to use.

Initial value method:

The dividends are recorded as income under the initial value method. The initial value method differs from the equity method as the dividend is not reduced from the value of the investment.

Partial equity method:

The partial equity method is not that appropriate as the equity method and the fair value method amortizations are accounted under this method.

The partial equity method is however easier than the equity method.

Answer 12

Ch. 3 - Prob. 1Q Ch. 3 - Prob. 2Q Ch. 3 - Prob. 3Q Ch. 3 - Prob. 4Q Ch. 3 - When a parent company applies the initial value...Ch. 3 - Several years ago, Jenkins Company acquired a...Ch. 3 - Benns adopts the equity method for its 100 percent...Ch. 3 - Prob. 8Q Ch. 3 - Prob. 9Q Ch. 3 - Prob. 10Q

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Describe each of these methods for recording investment, and indicate their advantages and disadvantages.

Answer to Problem 1Q

Explanation of Solution

Want to see more full solutions like this?

Chapter 3 Solutions