Lecture21 2010.12.01 PostClass

Lecture21 2010.12.01 PostClass - Lecture 21 Inter-corporate...

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Unformatted text preview: Lecture 21 Inter-corporate Investments Announcements: Exam #3 Exam #3: 12/17 3-5pm, Location TDB Exam #3 cumulative with an emphasis on the most recent material and will cover up to financial statement analysis (first half of Lecture 22) Cumulative in the sense that Exam #2 was cumulative Conflicts for Exam #3: No conflicts received so far. Deadline to notify 12/6 ACCT102 students: Prof. Gonedes will reschedule the 102 exam Sabbath starts at 4:19pm on 12/17 Sabbath accommodation exam, 12/17 2-4pm, SHDH 215 Announcements: Regrades Regrade requests for Exam #2 due 4:30pm TODAY Regrades for Exam #1 have been completed Pick up regraded exams from Prof Balakrishnan, Prof Taylor's, or TA Jason's office hours TODAY. None of the above is a valid answer for Exam #1, Question 21 on Versions 1 and 5, and Question 23 on Versions 2, 3, and 4 To get credit for this answer, turn in your exam to the front desk in the accounting suite by 12/2 4:30PM. NO EXCEPTIONS . Those submitting regrades request for this question can pick the exams next week from TA office hours Announcements: Misc. HW #4 posted by end of day Due 9am on 12/8 No regrades on homeworks Excused absences Those excused from HW 1, 2, or 3 were notified yesterday. Those excused from Exam 1 & 2 were notified yesterday. Makeup exam is 1/12 at 6pm. Report to Acct Suite. If you were not notified yesterday, and think you should have been, tell us by 12/3 Those not notified yesterday and missing scores will receive grades of zero. Announcements: Recitation Practice Exam 3 posted It is a true cumulative exam Recitation Problems Leases: Q12-Q15 from HW #3 Shareholders Equity: Q5, Q6 from Practice Exam #3 Intercorp Inv: Q7, Q8 from Practice Exam #3 Deferred Taxes: Q4 from Practice Exam #3 Goals of Todays Class Accounting for investments in other firms Debt investments Equity investments Financial disclosures: Deere Co. Investments The accounting for investments by one firm in the debt or equity securities of other firms can be very complicated. We will examine the accounting for those cases both where the investment is in debt securities and where the investment in equity securities and constitutes a minority interest. We will only consider the case where the investment securities are marketable (i.e. have an observable market value). There are three aspects of the accounting for investments that need to be examined to understand how inter-corporate investments impact on the financial reports of investing firms: 1) Valuation at acquisition 2) Valuation subsequent to acquisition as the securities are held by the investor 3) Recognition of income accounting both for distributions receivable or received and for changes in the market value of the securities subsequent to acquisition. Types of Intercorporate Investment Type of Ownership Ownership Amount Majority Active > 50% Minority Active 20% - 50% Minority Passive < 20% Accounting at Acquisition...
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Lecture21 2010.12.01 PostClass - Lecture 21 Inter-corporate...

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