GAAP assignment You have been asked by your boss how to record the purchase of 2
ID: 2576455 • Letter: G
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GAAP assignment You have been asked by your boss how to record the purchase of 22% of XYZ Corporation's common stock. The purchase makes our company one of three major stockholders whereby we will have significant influence over XYZ. What will you tell your boss? (US GAAP ISSUE) GAAP ASSIGNMENT WILL HAVE THE FOLLOWING FORMAT 1. PROBLEM TO BE RESEARCHED: What is the question being asked? 2. SOURCES FOR RESEARCH: (EX. FASB TEXT PAGE, GAAP GUIDE, ETC.) A CITATION MUST BE IDENTIFIED ACCOUNTING STANDARDS CODIFICATION TOPIC 111-11 FOR EXAMPLE) Where did you get you answer? (AN ASC NUMBER MUST BE USED AS A CITATION REFERENCE) 3. CONCLUSION- What is your answer? (please very short and right to the point on all the answers) (i.e. U.S. GAAP (ASC)Explanation / Answer
the problem to be solved-
1. to find out how we can record the purchase of the 22% common stock of xyz ltd. and how it will affect the financial statements of the firm. To evaluate the problem we need to put some lighjt on therecording of the stock as per various standards. How it will gonna make significant influence over the XY Z'z POCKET.
2, Investments in common stock with significant influence
--> Apply asc topic 323-10: Investments - Equity Method and Joint Ventures
--> APB 18
DEFINES - APB 18 is the Accounting Principles Board Equity Method of Accounting for Investments in Common Stock.
FASB ASC 820 Fair Value Measurements and Disclosures was issued to clarify the term “fair value”, a concept that is used throughout the FASB literature. FASB ASC 820 establishes a significant root for measuring and disclosing assets and investment values and has significantly changed the financial reporting landscape of entities holding illiquid investments. Also, the FASB and SEC have issued various additional interpretations and clarifications of the fair value concept. These developments have made it more critical than ever to obtain a third-party firm to provide a fair value of illiquid investments
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