8.11 Equity Method for Minority, Active Investments. U.S. GAAP requires firms to account for equity investments in which ownership is between 20% and 50% using the equity method. Ace Corporation owns 35% of Spear Corporation during 2014. Spear Corporation reported net income of $100.4 million for 2014 and declared and paid dividends of $25 million during the year. a. Calculate the equity income that Ace Corporation reports in 2014 related to its ownership in Spear Corporation. b. What does Ace Corporation report in its statement of cash flows for 2014 related to its ownership in Spear Corporation? c. Assuming that Ace Corporation’s balance sheet account, Investment in Spear Corporation, is $1,100 million at the beginning of 2014, what is the balance in the account at the end of 2014? Support your answers with calculations. 9.2 Revenue Recognition. Revenues are at the core of a firm’s ability to grow and prosper; thus, they are central to the analysis of a firm’s profitability. Although the time-of-sale method is the most common technique employed to recognize revenues, in some instances, a strong argument can be made for recognizing revenue before the product has been completed and delivered. Discuss circumstances in which this scenario is appropriate GM5 0 6 | Strategic Financial Analysis Unit 3 Assignment 1 R ubric: Cash Flow Analysis Criteria Level 4 Level 3 Level 2 Level 1 Earned (Excellent) (Good) (Fair) (Poor) Criterion 1: (8 pts.) Writing, spelling and grammar Consistently and ably uses properly structured paragraphs, sentences, grammar, and spelling. Consistently and ably uses properly structured paragraphs, sentences, grammar, and spelling, with some minor errors. Inconsistently uses properly structured paragraphs, sentences, grammar, and spelling. Document Includes quite a few errors. Does not consistently use properly structured paragraphs, sentences, grammar, and spelling. Document includes glaring errors. Mechanics and structure 8 7 6 5 Criterion 2: (20 pts.) Checklist: • Ch. 7 Questions and Exercises: 7.15 • Ch. 8 Questions and exercises 8.11:a • Ch. 9 Questions and exercises 9.2 Demonstrates a thorough/insightful understanding of the unit topic. (6 pts.) Using finance theory and methodology thoroughly addresses all checklist items. Analyzes the data required, and answers all questions thoroughly and correctly per the checklist. (14 pts.) Demonstrates a somewhat firm grasp of the unit topic. (5 pts.) Using finance theory and methodology mostly addresses all checklist items. Analyzes most of the data required, and answers most questions thoroughly and correctly per the checklist. (11 pts.) Does not demonstrate a firm grasp of the unit topic. (4 pts.) Using finance theory and methodology addresses some checklist items. Analyzes some of t.

1. 8.11 Equity Method for Minority, Active Investments. U.S.
GAAP requires firms to account for equity investments in which
ownership is between 20% and 50% using the equity method.
Ace Corporation owns 35% of Spear Corporation during 2014.
Spear Corporation reported net income of $100.4 million for
2014 and declared and paid dividends of $25 million during the
year.
a. Calculate the equity income that Ace Corporation reports in
2014 related to its ownership in Spear Corporation.
b. What does Ace Corporation report in its statement of cash
flows for 2014 related to its ownership in Spear Corporation?
c. Assuming that Ace Corporation’s balance sheet account,
Investment in Spear Corporation, is $1,100 million at the
beginning of 2014, what is the balance in the account at the end
of 2014? Support your answers with calculations.
9.2 Revenue Recognition. Revenues are at the core of a firm’s
ability to grow and prosper; thus, they are central to the
analysis of a firm’s profitability. Although the time-of-sale
method is the most common technique employed to recognize
revenues, in some instances, a strong argument can be made for
recognizing revenue before the product has been completed and
delivered. Discuss circumstances in which this scenario is
appropriate

2. GM5 0 6 | Strategic Financial Analysis
Unit 3 Assignment 1 R ubric:
Cash Flow Analysis
Criteria Level 4 Level 3 Level 2 Level 1 Earned
(Excellent) (Good) (Fair) (Poor)
Criterion 1:
(8 pts.)
Writing,
spelling and
grammar
Consistently and
ably uses properly
structured
paragraphs,
sentences,
grammar, and
spelling.
Consistently
and ably uses
properly
structured
paragraphs,
sentences,
grammar, and
spelling, with
some minor
errors.

3. Inconsistently
uses properly
structured
paragraphs,
sentences,
grammar, and
spelling.
Document
Includes quite a
few errors.
Does not
consistently use
properly
structured
paragraphs,
sentences,
grammar, and
spelling.
Document
includes glaring
errors.
Mechanics
and structure
8 7 6 5
Criterion 2:
(20 pts.)
Checklist:
• Ch. 7
Questions
and

4. Exercises:
7.15
• Ch. 8
Questions
and
exercises
8.11:a
• Ch. 9
Questions
and
exercises
9.2
Demonstrates a
thorough/insightful
understanding of
the unit topic. (6
pts.)
Using finance
theory and
methodology
thoroughly
addresses all
checklist items.
Analyzes the data
required, and
answers all
questions
thoroughly and
correctly per the
checklist. (14
pts.)

5. Demonstrates a
somewhat
firm grasp of the
unit topic.
(5 pts.)
Using finance
theory and
methodology
mostly
addresses all
checklist items.
Analyzes most
of the data
required, and
answers most
questions
thoroughly and
correctly per
the checklist.
(11 pts.)
Does not
demonstrate a
firm grasp of the
unit topic. (4
pts.)
Using finance
theory and
methodology
addresses
some checklist
items. Analyzes
some of the
data required,

6. and answers
the majority of
questions
completely and
mostly correctly
per the
checklist.
10 pts.)
Demonstrates
some lack of
basic knowledge
of the unit topic.
(3 pts.)
Using finance
theory and
methodology
addresses a
few of the
checklist items
correctly. Data
analysis is
missing or
incorrect in
some cases and
some answers to
questions and
exercises are
incorrect and
incomplete. (9
pts.)
Content 20 16 14 12 Earned:

7. Criterion 3:
(12 pts.)
Critical
thinking and
analysis
Response
exhibits strong
higher-order
critical thinking
and analysis (e.g.,
evaluation). Paper
shows
original thought.
Response
exhibits limited
higher-order
critical thinking
and analysis
(e.g.,
application of
information).
Paper shows
some original
thought.
Response
exhibits
simplistic or
reductive
thinking and
analysis but
does

8. demonstrate
comprehension.
Paper shows no
original thought.
Response
exhibits simplistic
or reductive
thinking and
analysis and
demonstrates
limited knowledge
of the subject
matter.
Critical
thinking and
analysis
12 9 8 7 Earned:
Total (40 pts.) Less than poor = 0
pts.
Earned:
Cash Flow Analysis