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Explain how ownership and control can influence the accounting for investments in common
stock
Solution
Ownership and control can have effect on accounting as an investment if the control is
substantial or there is holding subsidiary revelation between the investor and company. Hence it
is very crucial to know about the ownership before doing accounting for an investment.
Investment in common stock may create a holding subsidiary relation of the investment holding
is more than 50% of the common shares of the company. The accounting in such a case is done
with equity method.

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Explain how ownership and control can influence the accounting for i.pdf

  • 1. Explain how ownership and control can influence the accounting for investments in common stock Solution Ownership and control can have effect on accounting as an investment if the control is substantial or there is holding subsidiary revelation between the investor and company. Hence it is very crucial to know about the ownership before doing accounting for an investment. Investment in common stock may create a holding subsidiary relation of the investment holding is more than 50% of the common shares of the company. The accounting in such a case is done with equity method.