Explore BrainMass

Explore BrainMass

    Investment Activities and Income

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    How do you account for the investment activities subsequent to initial acquisition? Why is the income assigned to the non-controlling interest treated as a deduction in computing consolidated net income?

    © BrainMass Inc. brainmass.com June 3, 2020, 11:02 pm ad1c9bdddf
    https://brainmass.com/business/mergers-and-acquisitions/how-do-you-account-for-the-investment-activities-subsequent-to-initial-acquisition-260014

    Solution Preview

    Dear Student,

    Thank you for using BM.
    Below are my answers.

    Sincerely,
    Anna Liza Gaspar

    ANSWERS
    The accounting treatment for investment activities subsequent to the acquisition date depends on the substance of the acquisition. Investment activities are categorized into three: trading securities, available for sale and held to maturity.

    Trading securities are debt and equity securities that the investor company intends to dispose of as soon as possible. Accounting for trading securities subsequent to acquisition require marking to market which means that at the end of the accounting period the investor company adjusts the book value of the investment to reflect its current market value. Thus the company, at the end of its accounting period, recognizes either an unrealized loss or gain from its investment in its trading ...

    Solution Summary

    This solution discusses investment activities and income assigned.

    $2.19

    ADVERTISEMENT