Equity Method o July 1, Pilzer buys 2, 000 shares of Sud for 100,000 Investment in sud 100.000 Cash 100.000 O NoV. 1. Pilzner receives $4000 in dividends from Sud Cash 4,000 Inⅴ estment in sud 4.000 2-11
2-11 Equity Method July 1, Pilzner buys 2,000 shares of Sud for $100,000. Nov. 1, Pilzner receives $4,000 in dividends from Sud. Investment in Sud 100,000 Cash 100,000 Cash 4,000 Investment in Sud 4,000
Equity Method, at Year-end o Dec 31, Sud's income for the entire year is $50,000 Pilzner recognize investment income(1/2) Investment in s 5.000 Income from s 5.000 o The ending balance in the Investment in Sud is: S100,000 cost +S5,000 income-S4, 000 dividends =S101,000 ●S:S/E:500.000+25,000-20.000=505,000
2-12 Equity Method, at Year-end Dec. 31, Sud's income for the entire year is $50,000. Pilzner recognize investment income(1/2). The ending balance in the Investment in Sud is: $100,000 cost + $5,000 income - $4,000 dividends = $101,000. S: S/E: 500,000+25,000-20,000=505,000 Investment in S 5,000 Income from S 5,000
Stock Investments-Investor Accounting and reporting 4: Applying the Equity Method 2-13
2-13 4: Applying the Equity Method Stock Investments – Investor Accounting and Reporting
Equity Method a one-line consolidation o The investment is reported in a single amount on one line of the investors balance sheet o Investment income is reported in a single amount on one line of the investors income statement
Equity Method —— a one-line consolidation The investment is reported in a single amount on one line of the investor’s balance sheet, Investment income is reported in a single amount on one line of the investor’s income statement
Equity Method a one-line consolidation o Both the investor and investee continue to exist as separate legal entities with their own accounting systems(an acquisition of common stock). o The equity method applies to only one of the entities--the investor o The investors equity interest may range from20%—to100%
Both the investor and investee continue to exist as separate legal entities with their own accounting systems (an acquisition of common stock). The equity method applies to only one of the entities—the investor. The investor’s equity interest may range from 20%－ to 100%. Equity Method —— a one-line consolidation