Equity method is the one of the methods of treating investment in companies. This method is used when the investor has a significant influence over the investee. Investor owns between 20% to 50% of investee’s shares or voting rights. To prepare: Journal entries recorded by P Co. for its investment in S corporation by using equity method.

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Answer 1

Question

Chapter 4, Problem 4.19E

a.

To determine

Introduction: Equity method is the one of the methods of treating investment in companies. This method is used when the investor has a significant influence over the investee. Investor owns between 20% to 50% of investee’s shares or voting rights.

To prepare: Journal entries recorded by P Co. for its investment in S corporation by using equity method.

b.

To determine

Introduction: Consolidation accounting is a process where in the financial statement of several subsidiary companies are combined and showed in the financial statements of parent company. When the parent company has a share of 50% or more in a subsidiary company then this method is adopted.

To prepare: Consolidated entries needed to prepare consolidated financial statement.

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If Nixon Corporation had a net income of $420,000 in 2018 and it experienced a 19.8% increase in net income for 2019, what is its net income for 2019?

Answer 2

Question

Chapter 4, Problem 4.19E

a.

To determine

Introduction: Equity method is the one of the methods of treating investment in companies. This method is used when the investor has a significant influence over the investee. Investor owns between 20% to 50% of investee’s shares or voting rights.

To prepare: Journal entries recorded by P Co. for its investment in S corporation by using equity method.

b.

To determine

Introduction: Consolidation accounting is a process where in the financial statement of several subsidiary companies are combined and showed in the financial statements of parent company. When the parent company has a share of 50% or more in a subsidiary company then this method is adopted.

To prepare: Consolidated entries needed to prepare consolidated financial statement.

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Answer 3

Question

Chapter 4, Problem 4.19E

a.

To determine

Introduction: Equity method is the one of the methods of treating investment in companies. This method is used when the investor has a significant influence over the investee. Investor owns between 20% to 50% of investee’s shares or voting rights.

To prepare: Journal entries recorded by P Co. for its investment in S corporation by using equity method.

b.

To determine

Introduction: Consolidation accounting is a process where in the financial statement of several subsidiary companies are combined and showed in the financial statements of parent company. When the parent company has a share of 50% or more in a subsidiary company then this method is adopted.

To prepare: Consolidated entries needed to prepare consolidated financial statement.

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Answer 4

Question

Chapter 4, Problem 4.19E

a.

To determine

Introduction: Equity method is the one of the methods of treating investment in companies. This method is used when the investor has a significant influence over the investee. Investor owns between 20% to 50% of investee’s shares or voting rights.

To prepare: Journal entries recorded by P Co. for its investment in S corporation by using equity method.

b.

To determine

Introduction: Consolidation accounting is a process where in the financial statement of several subsidiary companies are combined and showed in the financial statements of parent company. When the parent company has a share of 50% or more in a subsidiary company then this method is adopted.

To prepare: Consolidated entries needed to prepare consolidated financial statement.

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Answer 5

Chapter 4, Problem 4.19E

a.

To determine

Introduction: Equity method is the one of the methods of treating investment in companies. This method is used when the investor has a significant influence over the investee. Investor owns between 20% to 50% of investee’s shares or voting rights.

To prepare: Journal entries recorded by P Co. for its investment in S corporation by using equity method.

b.

To determine

Introduction: Consolidation accounting is a process where in the financial statement of several subsidiary companies are combined and showed in the financial statements of parent company. When the parent company has a share of 50% or more in a subsidiary company then this method is adopted.

To prepare: Consolidated entries needed to prepare consolidated financial statement.

Answer 6

Chapter 4, Problem 4.19E

a.

To determine

Introduction: Equity method is the one of the methods of treating investment in companies. This method is used when the investor has a significant influence over the investee. Investor owns between 20% to 50% of investee’s shares or voting rights.

To prepare: Journal entries recorded by P Co. for its investment in S corporation by using equity method.

Answer 7

Chapter 4, Problem 4.19E

a.

To determine

Introduction: Equity method is the one of the methods of treating investment in companies. This method is used when the investor has a significant influence over the investee. Investor owns between 20% to 50% of investee’s shares or voting rights.

To prepare: Journal entries recorded by P Co. for its investment in S corporation by using equity method.

Answer 8

b.

To determine

Introduction: Consolidation accounting is a process where in the financial statement of several subsidiary companies are combined and showed in the financial statements of parent company. When the parent company has a share of 50% or more in a subsidiary company then this method is adopted.

To prepare: Consolidated entries needed to prepare consolidated financial statement.

Answer 9

b.

To determine

Introduction: Consolidation accounting is a process where in the financial statement of several subsidiary companies are combined and showed in the financial statements of parent company. When the parent company has a share of 50% or more in a subsidiary company then this method is adopted.

To prepare: Consolidated entries needed to prepare consolidated financial statement.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 4 - When is the carrying value of the investment...Ch. 4 - What is a differential? How is a differential...Ch. 4 - Prob. 4.3Q Ch. 4 - Prob. 4.4Q Ch. 4 - Prob. 4.5Q Ch. 4 - Prob. 4.6Q Ch. 4 - Prob. 4.7Q Ch. 4 - Prob. 4.8Q Ch. 4 - Prob. 4.9Q Ch. 4 - Prob. 4.10Q

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