文档介绍：© 2009 The McGraw-panies, Inc. All rights reserved.
McGraw-Hill/Irwin
Reporting Intercorporate Interests
2
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Accounting for Investments mon Stock
The method used to account for investments mon stock depends:
On the level of influence or control that the investor is able to exercise over the investee
On choices made by the investor because of options available
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Financial Reporting Basis by Level mon Stock Ownership
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Accounting for Investments mon Stock
Consolidation bining for financial reporting the individual assets, liabilities, revenues, and expenses of two or more panies as if they were part of a pany
Consolidation normally is appropriate when pany, referred to as the parent, controls pany, referred to as a subsidiary
A subsidiary that is not consolidated with the parent is referred to as an unconsolidated subsidiary and is shown as an investment on the parent’s balance sheet
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Accounting for Investments mon Stock
The equity method is used when the investor exercises significant influence over the operating and financial policies of the investee and consolidation is not appropriate
May not be used in place of consolidation if consolidation is appropriate
Its primary use is in reporting nonsubsidiary investments
The cost method is used for reporting investments in equity securities when both consolidation and equity-method reporting are inappropriate
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The Cost Method
Used when the investor lacks the ability either to control or to exercise significant influence over the investee
Accounting Procedures
The cost method is consistent with the treatment normally accorded noncurrent assets
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The Cost Method
At the time of purchase, the investor