[timmyj]

I am using Wiley CPAexcel and do not see anything about inter-company transactions and their affect on the investment. I remember from advanced accounting things like inventory sales between parent and sub would be deferred and reflected in the investment account when using the equity method. Keep in mind I am not talking about consolidated financials (greater than 50%), but for investments with significant influenced without consolidations (20-50%). Is this not tested on the CPA exam?

[sdk4747]

That was not in Becker either, appears to not be a tested area.

[ahugemistake]

Did you look in the Equity Investments Using Equity Method Accounting section? There's a little blurb about it there but nothing major. The main focus is on accounting for investment income and dividends.

AICPA Blueprints state the following for Equity Method Investments:

Identify when the equity method of accounting can be applied to an investment.

Calculate the carrying amount of equity method investments and prepare journal entries
(excluding impairment).

Measure impairment losses to be recognized in the financial statements on equity
method investments.

FAR - 78*
AUD - 66, 79
REG - 73, 76
BEC - 79

[Author]

Replies