Investments using Equity Method Accounting Flashcards by Tanner Rasmussen | Brainscape

Q

Types of questions:

A

Determine equity investment income for the year

- Dividend income- not income on P&L

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Q

Tools:

A

Decomposition Tool
Acquisition of Equity Investment
T-Accounts

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Q

What is the criteria of significant influence?

A

Significant portion of stock ownership, general guideline is 20%-50%.

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Q

What is the journal entry for recording your portion of income from the investee?

A

Investment DB

Equity Income CR

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Q

What is the journal entry for your portion of dividends received?

A

Cash DB

Investment CR

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Q

What is the journal entry for amortization and depreciation of assets that were in excess of the NBV?

A

Equity Income DB

Investment CR

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