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Define the equity method Use the following example to describe the equity method Presume that Company A bought 30% of Company Bs outstanding common stocks
- Define the equity method
- Use the following example to describe the equity method
Presume that
- Company A bought 30% of Company Bs outstanding common stocks at $400,000 (cash) on 01/01/2020
- During 2020, Company B earned net income of $200,000 and paid dividends of $40,000
Provide the journal entries for this equity investment in fiscal year 2020
What is the balance for this equity investment on 12/31/2020?
- Explain why the accounting numbers obtained using the equity method are misleading
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Accounting An Introduction
Authors: Eddie McLaney, Dr Peter Atrill, Eddie J. Mclan
5th Edition
0273733206, 978-0273733201
