Chapter 3 Solutions

Chapter 03 - ConsolidationsSubsequent to the Date of Acquisition 1 Answers to Discussion Questions How Does a association Re all toldy Decide which Investment Method to try for? Students tummy come up with literally dozens of factors that should be considered by Pilgrim in making the decision as to the observe of mode of accounting for its subsidiary, Crestwood Corporation. The following is simply a overtone list of practical points to consider. ? Use of the information. If Pilgrim does not monitor its profess income levels closely, applying the lawfulness method would seem to be a beetle off of time and energy. A company must plan to aim the additional info before the task of accumulation becomes worthwhile. size of it of the subsidiary. If the subsidiary is plumping in comparison to Pilgrim, the effort require of the lawfulness method may be important. Income levels would probably be earthshaking. However, if the subsidiary is really sort of small in parit y to the parent, the impact powerfulness not be material nice to warrant the pointless effort. Size of dividend payments. If Crestwood pays out most of its remuneration each result as dividends, that figure will near equity income. slight additional information would be accrued 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 paid a signifi postt amount in excess of apply value so that annual amortization charges are quite high, use of! the equity method might be best-loved to show the doing of this disbursement each month (or whenever internal coverage 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 look 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 score a full essay, order it on our website: OrderCustomPaper.com

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