Investments in Stock
- ង% outstanding common stock. Report by the cost method.
- Presumably no significant influence.
- Not always so. Investor may be able to exercise significant influence with a relatively small percentage interest. (See criteria for influence or lack of on previous slide).
- Net income to investor dictated by investee.
Cost Method Example: A company purchases 10% of B company common stock; 2,000 shares at $13 To buy:
Investment B Co C/S 26,000