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I am working on Targets 2016 Financial Report and this is one of the questions that...

I am working on Targets 2016 Financial Report and this is one of the questions that I am needing help on.

Per note 1, CVS has equity-method indicates that those investments ins surescripts, llc and in heartland heathcare servcies. CVS indicates that those investments are immaterial for the year ended December 31, 2015. How would Heartland's earnings affect CVS's income statement and balance sheet?

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Answer #1

Answer. Since the Investments by CVS are equity-method indicated they would be recorded in the books of CVS, Inspite of the fact that the Investments amount are immaterial for the year 2015, but now CVS is working on targets for 2016, so will take into consideration all the Investments.

The earnings of Heartland will have following effects on CVS

1. Income statement - Will Increase the Earnings of CVS by the proportion in earnings of Heartland.

2. Balance sheet - Will Increase the amount of investments in Heartland by the amount of earnings proportion share of CVS

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