Thanks for making me feel like I'm not going crazy – at least not yet! I am just hoping that I can remember enough (or BS enough) to make it through. Best of luck to everyone!!
Can someone confirm that this is now the correct answer (It used to be a)?
On January 1, Point, Inc., purchased 10% of Iona Co.’s common stock. Point purchased additional shares bringing its ownership up to 40% of Iona’s common stock outstanding on August 1. During October, Iona declared and paid a cash dividend on all of its outstanding common stock. How much income from the Iona investment should Point’s income statement report?
A. 10% of Iona’s income for January 1 to July 31 plus 40% of Iona’s income for August 1 to December 31.
B. 40% of Iona’s income for August 1 to December 31.
Answer (B) is correct.
Once the ownership percentage increased from 10% to 40%, Point was presumed to exercise significant influence over Iona. Thus, Point applies the equity method prospectively from the moment significant influence is achieved (August 1). Given that Point held 40% of Iona’s common stock beginning August 1, it should recognize its share (40%) of Iona’s income for the period August 1 to December 31.
C. 40% of Iona’s full-year income.
D. Amount equal to dividends received from Iona.
@mtaylo- yes B is correct- the new accounting rules make recognition of significant influence gained / lost a prospective action. Look back @aa posted on where significant influence was lost over the weekend-
Managed to stress myself into a major migraine yesterday- also think its this weather and the early spring/ pollen counts- WTH! This thing truly sucks- I MUST PASS… off to it- Good luck everyone today!
and they ask me why I drink...
FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2
Bach Co. adopted the dollar-value LIFO inventory method as of January 1, 20X0. A single inventory pool and an internally computed price index are used to compute Bach's LIFO inventory layers. Information about Bach's dollar value inventory follows:
Inventory:
at Base- at Current-
Date Year Cost Year Cost
———- ——— ———–
01/01/X0 $90,000 $90,000
20X0 layer 20,000 30,000
20X1 layer 40,000 80,000
What was the price index used to compute Bach's 20X1 dollar-value LIFO inventory layer?
I'm seeing different answers for this question on the internet. What do y'all think?
@HRSexton – you added all three years' inventories together to get a “blended” ratio. What you're looking for is the ratio for that 20X1 year on its own, so you use 80,000/40,000=2.00
.