True and False:

1. GAAP allows companies that would normally use the equity method the option of using the fair value method, assuming the value of the stock is readily determinable.
2. FRS allows companies that would normally use the equity method the option of using the fair value method, assuming the value of the stock is readily determinable.
3. the concepts of significant influence and control under GAAP are very similar to the concepts used in IFRS.

Journal entry

4.Big company receives $500 in dividends from Little. Assume Big has made no prior entry to create a receivable, and Big accounts for Little using the equity method of accounting. (3 points)

5.Same as question # 4, but Big uses the fair value method of accounting for its investment in Little.

6.Same as question # 4, but Big uses the cost method of accounting for Little.