Case 12-70

Case 12-70 - they do not have to file them right away. They...

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With Coca-Cola Co. and Marriott Corporation companies doing their financial statements this way, is a sign that they are not truthful to the lenders and anyone else that wants to look at their statements. Under false statements you really don’t know what you are getting into with a company but since so many companies (larger) are doing this now and getting by with it. SFAS No. 94 does not require that a company to use the equity method for any of their investments when they own 50% or less of a company or are an unconsolidated subsidiaries. Although if they could influence the operating policies than they need to use the equity method and if they cannot then they need to use the cost method. Since their subsidiaries are consolidated than they lack control over their financial statements. According to GAAP they need to file everything on their financial statements but
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Unformatted text preview: they do not have to file them right away. They are passing new laws that require them to file them in a timeline and as long as they file within the timeline they will be able to file an amendment for a Form 10-K. Do I believe that they are doing the right or ethical thing, no I dont. I believe that as long as you are always honest then you never have to worry about covering your tail later or trying to remember what you said or what you did in the past. I believe that the best thing for them to do is to report everything that they have and show their financial statements with the correct equations. If they did that then they would never have to worry about getting in trouble or trying to stay within GAAP regulations.
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This note was uploaded on 05/29/2011 for the course EC 2011 taught by Professor Johnson during the Spring '11 term at FIT.

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