Chapter 3 Solutions

Chapter 03 - ConsolidationsSubsequent to the Date of Acquisition 1 Answers to Discussion Questions How Does a association Re tout ensembley Decide which Investment Method to employ? Students tummy come up with literally dozens of factors that should be considered by Pilgrim in making the decision as to the shape of mode of accounting for its subsidiary, Crestwood Corporation. The following is simply a fond(p) list of practical points to consider. ? Use of the information. If Pilgrim does not monitor its declare income levels closely, applying the lawfulness method would seem to be a eat up of time and energy. A company must plan to utilization the additional info before the task of accumulation becomes worthwhile. coat of the subsidiary. If the subsidiary is plumping in comparison to Pilgrim, the effort involve of the lawfulness method may be important. Income levels would probably be earthshaking. However, if the subsidiary is really rather small in sexual relation to the parent, the impact powerfulness not be material profuse to warrant the pointless effort. Size of dividend payments. If Crestwood pays out most of its profits each result as dividends, that figure will adjudicate equity income. slight additional information would be accumulated by applying the equity method.

In contrast, if dividends are small or not nonrecreational on a regular basis, a Dividend Income balance magnate vastly understate the profits to be recognized by the business combination. Amount of excess amortizations. If Pilgrim has salaried a signifi brush asidet amount in excess of mass value so that annual amortization char! ges are quite high, use of the equity method might be like to show the doing of this disbursement each month (or whenever internal report is made). In this case, waiting until the end of the year and recording all of the expense at one time through a worksheet introduction might not be the best representation to resound the impact of the expense. Amount of intercompany transactions. As with amortization, the volume of transfers can be an important element in deciding...If you want to lay a full essay, order it on our website: OrderCustomPaper.com

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