Equity Method master - PowerInvestments...

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Power Investments Equity Method for Investments
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2 Your rights as a shareholder: Right to receive dividends and return of residual capital Right to transfer ownership to others Right to vote Elect board of directors Vote on key company matters Right to maintain your proportional investment ( Pre- emptive right ) Common Stock Power
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Accounting for Stock Investments:   Power or Money? 0% 20% 50% 100% No  Significant Influence FAS no. 115 Methods Significant Influence Equity Method Control Consolidation Ownership    Percentage
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Significant Influence Some, but not most or all, decision-making and  corporate governance ability by investor Longer-term investment viewed by Boards as  exercising all relevant rights of stockholders
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‘Simple’ equity method – what  you’ve already learned Proportional share of investee income (OCI)  is recorded as investment income (OCI), and  increase in investment account, by investor
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Equity Method master - PowerInvestments...

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