CCFC 513 Study Guide - Comprehensive Final Exam Guide - Income Statement, Balance Sheet, Canada
Document Summary
Equity investments: if company p wants to invest in company s, p can. Retained earnings (beginning balance + net income dividends = ending balance) Focus on common shares because those are the ones that have voting rights. In the next chapters, we will be discussing about: accounting: cost method and equity method, disclosure: consolidation where you have to disclose everything under the control of company p. P wants to buy shares of s issue of control (controlling another company) P wants to control (dictate all activities): it will buy more than 50% of outstanding voting common shares to get voting rights. To control the board of director, you get enough votes to elect representatives of the investee into the board. The investment is either reported using the cost method or equity method. To record the investment on the actual books of company p. To record the receipt of dividends declared by s.