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Accounting business taxes, equities, fair value etc.

Please identify two motives why companies invest in securities issued by other corporations.

What constitutes significant influence when an investor's financial interest is below the 50% level.

Please explain the accounting treatment when a company purchases less than 20% of another company's stock.

Please explain how revenue and dividends are treated when the equity method is used.

Briefly explain the accounting issues related to the fair value option for equity securities.

Two motives would be wanting to make interest off of a ...

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Please identify two motives why companies invest in securities issued by other corporations

Two motives would be wanting to make interest off of a bond (for the company's own investment purposes/financial gain). The other would to be if the company itself has an interest in the other organization, and wants to see that company do well, so it loans them the money by purchasing its bond(s). Related to this, the buying company would buy a certain amount, and have significant influence in the company they bought into.

What constitutes significant influence when an investor's financial interest is below the 50% level?

This would be significant influence-Say you or your organization controlled less than 50% of a company's finances. If you were the one company or individual who owned the most ...

Solution Summary

Please identify two motives why companies invest in securities issued by other corporations.
Student asks the following questions-

What constitutes significant influence when an investor's financial interest is below the 50% level.

Please explain the accounting treatment when a company purchases less than 20% of another company's stock.

Please explain how revenue and dividends are treated when the equity method is used.

Briefly explain the accounting issues related to the fair value option for equity securities.

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