Unformatted text preview: nvestor owns 20% to 50% of the voting stock of an investee company, the investor is presumed
to exercise significant influence over the investee unless there is evidence to the contrary.
Required: 184.What is the significance of owning more than 50% of the voting common stock of another company?
Many corporations own more than 50% of the voting stock in other corporations. Sometimes these
affiliated companies operate within the same industry, and many times the companies are in unrelated
Required: 185.Describe the adjustments necessary when a company (1) changes to the equity method from another
method, and (2) when a company changes from the equity method to another method.
Sometimes companies change the extent to which they can significantly influence an investee, such that
they have to change to the equity method or from the equity method of accounting for the investment.
Required: 186.Describe how U.S. GAAP and IFRS differ in how they would have Gibson account for this
Assume Gibson Company is an equal partner in a joint venture with Glover Company. Each company
owns 50% of Pesci Company, and equally shares decision-making authority.
Required: 187.Describe how accounting for a held-to-maturity investment, an available-for-sale investment, and an
equity-method investment is affected by a company electing the fair value option.
According to GAAP, companies can elect the fair value option when accounting for many investments.
Required: 188.Explain how debt investments are accounted for under IFRS No. 9. What alternative accounting
approaches are available, what determines whether an investment qualifies for each approach, and what
are the key features of each approach with respect to accounting for unrealized gains and losses?
IFRS No. 9 is a standard that indicates accounting for investments when the investor does not have
significant influence under the investee.
Required: 189.Explain how equity investments are accounted for under IFRS No. 9. What alternative accounting
approaches are avai...
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- Spring '09
- Balance Sheet, A. Securities