under the equity method, we take owner’s proportion to income statement. does it goe to the income statement on pre or post tax basis? does the full amount go to reflect in net income ? reference?
I feel stupid not knowing these basic questions. I think the answer is it goes into NI post tax because you are taking the proportion of NI from the other company after the other company paid taxes.
Post.
Sweet.
Sure? what ever happend to double taxation , if the investment is across borders/ or states?
grace grace Wrote: ------------------------------------------------------- > Sure? what ever happend to double taxation , if > the investment is across borders/ or states? I don’t think its really double taxation. You are taxing the investee and your comp separately and then adding both. If its post tax then add to earnings before tax to investor’s IS and then taxed the sum, that would be double taxation.
guys, check cfai text page 42 - the case of petroleum corp and supply. I think the investor share in the investee’s net income goes on the investor’s I/S: 1. Post Operatimng profit 2. PRE - TAX! Sweeter, I guess!
Looking more closely, it’s actually post-tax. The $40 tax was derived from $100 pretax income x 40%. The extra $4 Supply income wasn’t accounted for.
hmmmmmmmmmmmmmmmmmmmm Sweeeeeeetest ever! thank you.