19A1 - Advanced Financial Accounting - Stock Investment I

All of the following are ways to earn money as a stockholder except:

• Getting dividends

• Selling the stock at a higher value

• Stock splits

• Selling the stock at a lower value

Where an investor has discontinued the use of the equity method because the associate has incurred losses it must disclose the:

• unrecognised share of current period and cumulative losses of the associate

• reason why it has discontinued the method

• accounting policy it has adopted in place of the equity method

• effect on the statement of changes in equity if it had continued to use the method

The consolidation process consists of all the following except:

• Combining the financial statements of two or more legally separate companies.

• Eliminating intercompany transactions and holdings.

• Closing the individual subsidiary’s revenue and expense accounts into the parent’s retained earnings.

• Combining the accounts of separate companies, creating a single set of financial statements..

Usually, an investment of 20 to 50 percent in another company’s voting stock is reported under the (a)  

(a)   of accounting is also called a one line consolidation.