value of equity invest yanna

CFA Level II
#1

1000 invested +375 net inc - 20 divs - 50 dep = 1305 where 50 dep = 150 paid excess over mkt price dep’d over 3 years?

#2

I thought even if the firm says they’re depreciating the value over, you aren’t allowed to do it? I may be thinking of a completely different question.

#3

i think you have to dep the excess they paid over fair mkt value of firm, no?

#4

i definitely got 1305

#5

dirtydirty Wrote: ------------------------------------------------------- > 1000 invested +375 net inc - 20 divs - 50 dep = > 1305 > > where 50 dep = 150 paid excess over mkt price > dep’d over 3 years? Right.

#6

Well, for a 50% jointly owned venture, US Gaap uses Equity or Consolidation?

#7

Isn’t the excess goodwill, tested annually for impairment?

#8

If you buy into a firm and pay excess over book it is first attributed to to fair value of assets compared to book values, which would be depreciated. Any excess over the fair value is goodwill and would not be able to be amortized.

#9

They specifically said the excess value was attribtuted to depreciable assets.

#10

Niblita75 Wrote: ------------------------------------------------------- > I thought even if the firm says they’re > depreciating the value over, you aren’t allowed to > do it? I may be thinking of a completely different > question. since it was equity i did not depreciate - it’'s not your asset you have just a cost to your investment I personally used 1355

#11

99% sure that isn’t right florinpop. There was a specific example in schweser.

#12

Blkmoon Wrote: ------------------------------------------------------- > Well, for a 50% jointly owned venture, US Gaap > uses Equity or Consolidation? I thought equity b/c they had joint control (or something like that) as opposed to control???

#13

equity, in theory could not have absolute control there

#14

The other firm had the other 50% so they didn’t have total control.

#15

exactly if they don’t have control it’s equity i thought youwould not depreciate but i know there was an example i might pe wrong

#16

I said I wouldn’t look at my books any more for this but… page 163 in Schweser book 2. It says you depreciate.

#17

Was 1355 an answer?

#18

yeah 1355 was

#19

LICandidate Wrote: ------------------------------------------------------- > I said I wouldn’t look at my books any more for > this but… > > > page 163 in Schweser book 2. It says you > depreciate. You dep under each method because NI has to stay the same.

#20

it was 1305 has nothing to do with control. you depreciate the full amount for each method