Notes 12

Notes 12 - Ex. ABC buys 20% of XYZ for $300,000 Later XYZ...

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Linking the B/S and I/S Using equity method of accounting for investments: o Less than 20% equity ownership: Available for sale securities o Greater than 50% ownership: Trading securities o Between 20% and 50% ownership: Equity method o Applying the equity method:
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Unformatted text preview: Ex. ABC buys 20% of XYZ for $300,000 Later XYZ reports NI of $60,000 Equity method t-chart: Debit: o Original cost of investment o Share of NI gain Credit: o Share of dividends paid o Share of NI loss (if there had been a loss)...
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