CH 1.docx - Hello my name is Professor Dave Jones and today...

This preview shows page 1 - 2 out of 2 pages.

Hello, my name is Professor Dave Jones, and today we're going to illustrate an inter- company inventory sale using the equity method ofaccounting. This is where the I entry begins to be introduced, in connection with consolidated financial statements. So w e're going to identify how to do aninventory sale using the equity method, and we're going to demonstrate an example to use this illustration. So we're going to have a continuous sale of inventory-- that means that every year, the par ent is selling inventory to the subsidiary, and it happens year after yearafter year. And they' re going to use the equity method of accounting. Assume on January 1st, we have 100% of a subsidiary acquired by a parent. The purchaseprice was $175,000 in excess of the book v alue of stockholders' equity, and all that was assigned to an unrecorded asset with a useful life of 10 years. Assume thewholly owned sub sells inventory to the parent. I said before, parent to sub, now it's sub to parent.
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Spring '14
  • Generally Accepted Accounting Principles, Professor Dave Jones

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern