高级财务管理chap001.ppt

Reporting a Change to the Equity Method (Retroactive Adjustment) ? Giant Company acquires a 10% ownership in Small Company on January 1, 2012. ? Giant does not believe that their company has gained the ability to exert significant influence over Small. ? Giant properly records the investment using the fair-value method as an available-for-sale security. ? On January 1, 2014, Giant purchases another 30% of Smalls outstanding stock, thereby achieving the ability to significantly influence Smalls decisions. ? How should this additional acquisition be recorded? 1-31 ADV ANCED ACCOUNTING LUO Dianying 2013-2014-1 Main Topics ? Equity method of accounting for investment ? Consolidations ? Segment reporting ? Foreign currency ? Accounting for Government ? Accounting for Not-for-Profit organization ? As the body without the spirit is dead, so faith without deeds is dead . James Let your Yes be Yes, No, No. Let your Yes be Yes, No, No. 4 ? Email ： 283302979@ ? Tel ： 1517 1479 861 ? 文泉楼南 448 室，周一、四上午 Chapter One The Equity Method of Accounting for Investments McGraw-Hill/Irwin Copyright ? 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Accounting for Investments in Corporate Equity Securities GAAP recognizes 3 ways to report investments in other companies: Fair-Value Method Consolidation Equity Method The method selected depends upon the degree of influence the investor has over the investee . LO 1 1-6 Let your Yes be Yes, No, No. Fair Value Method 1-7 Investments classified as Trading Securities : ? Held for sale in the short term. ? Unrealized holding gains and losses are included in earnings ( net income ). Investments classified as Available-for-Sale Securities: 可销售证券是不期望在近期出售的的投 资证券 ? Any Securities not classified as Trading. ? Unrealized holding gains and losses are reported in shareholders equity as other comprehensive income (i. e., not included in net income). Investments in equity securities are recorded at cost and subseq