Question

2. On July 1, 2017, Dynamic Corporation purchased for cash 40% of the outstanding capital stock of Cart Company. Dynamic has a fiscal year end of October 31st and Cart has a fiscal year end of March 31st. On October 31st, it has not yet been determined by Dynamic conclusively whether it has the ability to significantly influence Cart’s business operation. Cart Company’s stock is actively traded on the NASDAQ exchange reported its net income for the period ended October 31st to Dynamic. Cart also paid cash dividends on September 15th and December 15th to Dynamic and its other stockholders. How should Dynamic report the above facts in its October 31, 2017 financial statements. Discuss the rationale for your answer.

Answer 1

answer:

the discussion of the Dynamic report the above facts of the finacial statements on the rationale answer is below:

• Introder for Dynamic to Equity strategy, it is basic to decide whether there is critical impact.
• In the event that in spite of having a 40% stake, Dynamic Corp.
• can't altogether impact Cart's the same old thing, at that point Equity technique won't be utilized.
• As needs be, the Cost technique will be utilized. Record for the 40% interest in Balance Sheet at Book Value of Net Assets, and account for the profit in the wage proclamations, as wage from speculations under other pay.