Company A purchased equity interest in Company B a publicly traded company, for $ million on
January X As such, Company A accounts for its equity interest in Company B by using the
equity method of accounting.
On December x Company A acquired the remaining equity interest in Company B for $
million and thus, obtains control of Company B Company A accounts for the transaction as a business
combination. Company Bs identifiable net assets were recognized at $ million on December x
The fair value of Company As equity interest in Company B was $ million, and the carrying amount
book value of that equity interest was $ million on December
Company B declared a dividend of $ million for the year ended December X The deferred tax
accounting implications are ignored.
Required:
How should company A accounts for all the above mentioned equity interest in Company B for the year
ended December XPlease show your computations in supporting your explanations.
