MGMT 120A Lecture Notes - Lecture 9: Financial Statement, Equity Method, Net Income
Document Summary
If there was a loss rather than income these would be switched: receiving dividends. Increasing asset balances to their fair values usually will result in higher expenses in subsequent periods (because depreciation expense goes up) So the parent company must adjust its investment revenue for additional depreciation expense to act as if the sub company had recorded the additional depreciation. If the investee reports a net loss, the investment account is decreased by the investor"s share of the investee"s net loss (adjusted for additional expenses) If the sale of the equity-method investment meets the criteria for a discontinued operation, it is reported in the financial statements as a discontinued operation. The bv of carne"s net assets was 192 million. The fmv of carne"s depreciable assets exceeded their book value by million and these assets had an average remaining useful life of 8 years.
