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Unformatted text preview: Individual Assignment Week One Choice of Accounting Method Slanted Building Supplies purchased 32 percent of the voting shares of Flat Flooring Company in March 23x3. On December 31, 2003, the officer of Slanted Building Supplies indicated they needed advice on whether to use the equity method or cost method in reporting their ownership in Flat Flooring. A) What factors should be considered in determining whether equity method reporting is appropriate? With them having 32 percent of voting shares they should make sure there would be no issue with bankruptcy pending or just being approved for the organization this way there would be no issue with restrictions on earning for the organization B) Which of the two methods is likely to show the larger reported contribution to Slanted earnings? I would have to believe that the equity method C) Why might the use of the equity method become more appropriate as the percentage of ownership increases? Because of financial reporting purposes E2-1 Multiple Choice Questions...
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This note was uploaded on 01/14/2012 for the course ACCOUNTING ACC 440 taught by Professor Unknown during the Spring '11 term at University of Phoenix.
- Spring '11