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Chapter 2 - Stock Investments (Investment Accounting and Reporting)…
Chapter 2 - Stock Investments (Investment Accounting and Reporting)
Accounting for Stock Investments
Cost Method
Record Investment at Cost
Record dividends as income, except for liquidating dividends
Equity Method
Record investments at cost and adjust for earnings, losses and dividends
Accounting Procedures under the fair value/cost and equity method
Economic Consequences of Using Fair Value/Cost and Equity Method
Parent company can manipulate investment income
Equity Method - a One-Line Consolidation
Equity Investment at Acquisition
Assignment of Excess Investment Cost over Underlying Book Value of Equity
Accounting for Excess of Investment Cost over Book Value
Excess of Book Value over Cost
Bargain Purchase
Interim Acquisitions of Investment Interest
Investment in a Step-by-step Acquisition
Sale of an Equity Interest
Stock purchases directly from the investee
Investee Corporation with Preferred Stock
Extraordinary Items and Other Considerations