Discussion:
Create a 400-600 words that answer to the following questions with your thoughts, ideas, and comments. Be substantive and clear, and use examples to reinforce your ideas.
You are an intern in a CPA firm. Your manager walks into your cubicle and says, "One of our clients is thinking about investing in a company. He wants to know how he should account for this investment. Be prepared to discuss it with the client tomorrow." Write a memo to your manager giving your thoughts on how this should be handled by the client. The situation is the following: ?Company F purchased 40% of the outstanding stock of company K on June 30, 20XX. ?Both of the companies have a December 31st, year end. ?Company K is a publicly traded company and reports its net income to company F. ?Company K also pays a hefty dividend to the shareholders of company F. ?How should company F report the above facts on its December 31, 20XX balance sheet and income statement? ?Support your answer.