上海对外经贸大学 高级财务会计学课件-高级财务会计学（英）2.Stock Investments – Investor Accounting and Reporting.pptxVIP

Chapter2

StockInvestments–InvestorAccountingandReporting

StockInvestments:ObjectivesRecognizeinvestorsvaryinglevelsofinfluenceorcontrol,basedonthelevelofstockownership.Anticipatehowaccountingadjuststoreflecttheeconomicsunderlyingvaryinglevelsofinvestorinfluence.Applythefairvalue/costandequitymethodsofaccountingforstockinvestments.

Objectives(continued)Identifyfactorsbeyondstockownershipthataffectaninvestorsabilitytoexertinfluenceorcontroloveraninvestee.Applytheequitymethodtostockinvestments.Learnhowtotestgoodwillforimpairment.

1:LevelsofInfluenceorControlStockInvestments–InvestorAccountingandReporting

LevelsofInfluence20%presumeslackofsignificantinfluence?fairvalue(cost)method20%to50%presumessignificantinfluence?equitymethod50%presumescontrol?consolidatedfinancialstatementsFairvalue(cost)methodEquitymethodConsolidatedfinancialstatements

2:AccountingReflectsEconomicsStockInvestments–InvestorAccountingandReporting

AccountingfortheInvestment DegreeofinfluenceInvestmentscarryingvalueInvestmentincomeLackofsignificantinfluenceFairvalue(cost,ifnonmarketable)DividendsdeclaredSignificantinfluenceOriginalcostadjustedtoreflectperiodicearningsanddividends,e.g.,aproportionateshareofinvesteesnetassetsProportionateshareofinvesteesperiodicearnings**Theinvestorcouldmanipulateitsowninvestmentincomeifincomeismeasuredbydividends.

3a:FairValue/CostMethodStockInvestments–InvestorAccountingandReporting

FairValue(Cost)MethodPilbuys2,000sharesofSudfor$100,000anddoesnothavesignificantinfluenceoverSud.Pilreceives$4,000individendsfromSud.InvestmentinSud(+A)100,000Cash(-A)100,000Cash(+A)4,000Dividendincome(R,+SE)4,000

3b:EquityMethodStockInvestments–InvestorAccountingandReporting

EquityMethodAtacquisition:Palbuys2,000sharesofSudfor$100,000.Palr