To: Chief Accountant
Selig Company
Memo on accounting treatment to be accorded Investment in Spoor Corporation:
Selig Company should follow the equity method of accounting for its investment in Spoor Corporation because Selig Company is presumed to be able to exercise significant influence over the operating and financial policies of Spoor Corporation due to the size of its investment (40%).
In 2012, Selig Company should report its interest in Spoor Corporation’s outstanding capital stock as a long-term investment. Following the equity method of accounting, Selig Company should record the cash purchase of 40 % of Spoor Corporation at acquisition cost.
40% of Spoor Corporation’s total net income from July 1, 2012, to December 31, 2012,
Selig Company
Memo on accounting treatment to be accorded Investment in Spoor Corporation:
Selig Company should follow the equity method of accounting for its investment in Spoor Corporation because Selig Company is presumed to be able to exercise significant influence over the operating and financial policies of Spoor Corporation due to the size of its investment (40%).
In 2012, Selig Company should report its interest in Spoor Corporation’s outstanding capital stock as a long-term investment. Following the equity method of accounting, Selig Company should record the cash purchase of 40 % of Spoor Corporation at acquisition cost.
40% of Spoor Corporation’s total net income from July 1, 2012, to December 31, 2012,