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    Equity method of accounting

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    Assume that P uses the equity method of accounting for its investment in S. Solve for the unknown in each of the following independent cases.

    CASE A CASE B CASE C
    P's ownership of S A 30% 405
    investment in S - beg. of year $100 B $130
    investment in S - end of year 105 128 C
    S's income (loss) 100 90 40
    S's dividends paid 80 30 20

    © BrainMass Inc. brainmass.com June 3, 2020, 11:42 pm ad1c9bdddf
    https://brainmass.com/business/accounting/equity-method-accounting-293004

    Solution Preview

    In the equity method the investment account increases by the share of net income and decreases by the share of dividends.
    Case A - Let A be the percentage holding. The investment account will increase ...

    Solution Summary

    The solution explains how to solve for unknowns using equity method of accounting.

    $2.19

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