TAILIEUCHUNG - Lecture Financial accounting (3/e): Appendix D - Spiceland, Thomas, Herrmann

Appendix D - Appendix D. After reading the material in this chapter, you should be able to: Explain why companies invest in other companies, account for investments in equity securities when the investor has insignificant influence, account for investments in equity securities when the investor has significant influence, account for investments in equity securities when the investor has controlling influence, account for investments in debt securities. | Investments Appendix D 1 Learning Objectives Explain why companies invest in other companies Account for investments in equity securities when the investor has insignificant influence Account for investments in equity securities when the investor has significant influence Account for investments in equity securities when the investor has controlling influence Account for investments in debt securities App D-2 Learning Objective 1 Explain why companies invest in other companies App D-3 Part A Equity Investments App D-4 Equity investments are the “flip side” of issuing stock. One company issues stock, and another company invests by purchasing that stock. Here, we discuss how do companies that purchase stock, account for their investment. The way we account for equity investments is determined by the degree of influence an investor has over the company in which it invests. A guideline for determining the degree of influence is the percentage of stock held by the investor. 4 Illustration —Accounting for Equity Investments App D-5 This illustration summarizes the reporting methods for equity investments. When one company (investor) purchases more than 50% of the voting stock of another company (investee), the investor has controlling influence. Companies account for their controlling investments using the consolidation method. When ownership is below 50% of the voting shares, the investor still might be able to exercise significant influence over the investee. This would be the case if the investor owns a large percentage of the outstanding shares relative to other shareholders. When significant influence exists, we account for the investment using the equity method. In the most common investment scenario, a corporate investor has insignificant influence, often indicated by ownership of less than 20% of the voting shares. In this case, we use the fair value method. 5 Learning Objective 2 Account for investments in equity securities when the investor has insignificant

• Kế toán - Kiểm toán
• Financial accounting
• Lecture Financial accounting
• The accounting cycle
• Financial statement
• Purchase equity investments
• Receive cash dividends
• Issues in financial accounting
• Kế toán tài chính
• Financial statements
• Accounting standards
• Financial reporting
• Financial Accounting Standards Board
• Fundamental financial accounting
• Lecture Fundamental financial accounting concepts
• Accounting cycle
• Accounting for accruals
• Accounting system
• Accounting activities
• Financial accounting practice
• Accounting information system
• Accounting terminology
• Reporting financial results
• Evaluating liquidity
• Business firms
• The financial reporting reform
• Accounting information
• Management accounting
• Accounting equation
• Accounting systems
• Decision making
• External financial reporting
• Accounting for business
• Lecture Accounting for business
• Financial accounting reports
• Statement of financial performance
• Accrual accounting systems
• Statement of financial position
• Mastering financial accounting essentials
• Financial accounting essentials
• Accrual accounting
• Income statement
• Accounting conventions
• Internal control
• Accounting for cash
• Accounting for receivables
• Computing uncollectible accounts expense
• Long term debt
• Accounting for long term debt
• Paper F3
• Revision kit 2016
• Accounting Financial
• Accounting Financial Review
• Financial Review accounting exam
• Study text 2016
• Language of business
• Double entry accounting system
• Credit terminology
• Merchandising businesses
• Accounting for merchandising businesses
• Accounting for inventories
• Cash discounts
• International financial reporting standards
• Completing the accounting cycle
• Accounting worksheet
• Classified balance sheet