标题: How to handle interest in intercorporate investments [打印本页] 作者: mar350 时间: 2013-4-14 19:46 标题: How to handle interest in intercorporate investments
I’m aware how to handle NI and dividends for both passive investments and the equity method.
What about interest? Page 118 Book 2 shows that interest goes on the I/S for H2M, AFS, and Trading. So if interest paid was 1M, do you just add 1M to the parent’s net income?
What about in equity method?
I haven’t seen interest before in any intercorporate problems..作者: ryanlb 时间: 2013-4-14 19:47
Interest/dividend income would show up as an operating line item on the IS. The equity method would be the same.作者: dkishore1 时间: 2013-4-14 19:47
The equity method would be the same.
meaning that interest income does not affect either balance sheet or income statement under eqiuty method?作者: thommo77 时间: 2013-4-14 19:48
Effects on interest using the equity method:
Interest income would increase your operating income.
On the BS, I know for a fact that Dividends decrease your investment in sub account through this relationship:
Beg. investment in sub
+ Pro rata share in earnings
- Dividends
End investment in sub
I don’t think interest payments would have any bearing since interest would be a coupon payment on debt issued by the sub to the parent.
