At the beginning of 2018, Pioneer Products’ ownership interest in the common stock of LLB Co. increased tothe point that it became appropriate to begin using the equity method of accounting for the investment. Thebalance in the investment account was $44 million at the time of the change but would have been $56 millionif Pioneer had used the equity method since first investing in LLB. How should Pioneer report the change?Would your answer be the same if Pioneer is changing from the equity method rather than to the equitymethod?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

At the beginning of 2018, Pioneer Products’ ownership interest in the common stock of LLB Co. increased to
the point that it became appropriate to begin using the equity method of accounting for the investment. The
balance in the investment account was $44 million at the time of the change but would have been $56 million
if Pioneer had used the equity method since first investing in LLB. How should Pioneer report the change?
Would your answer be the same if Pioneer is changing from the equity method rather than to the equity
method?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Investments and Financial instruments
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education