Cost and equity method

Question 1

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Answer 1

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Question 2

Investment in other entities

Answer 2

0-20%- cost or marketable securities
20-50% equity method
more than 50% consolidation

Question 3

Equity methods

Answer 3

when the investor has significant control over the investees like
technological dependency
board member of the investee
major supplier or customer
20% of voting stock
plans to invest in additional stock

Question 4

Goodwill

Answer 4

Unidentifiable asset which makes business worth more than identifiable asset

Question 5

Equity in earnings

Answer 5

Income account

goes in to the category of other non-operating income