Asked by Stephan Polit on Jun 11, 2024
Verified
The Wellness Society, a not-for-profit organization, owns 30% of Walk for Canada, also a not-for-profit organization. The two organizations operate independently and have no board members in common. How should the Wellness Society account for its investment in Walk for Canada?
A) Cost method
B) Equity method
C) Equity method with supplemental disclosure
D) Note disclosure with a description of the relationship and nature and extent of its economic interest
Equity Method
An accounting technique used for recording investments in associate companies where the investment is represented by the equity value.
Cost Method
An accounting approach whereby investments are recorded at their original purchase cost, without adjusting for changes in fair value, except for impairments.
Investment
The allocation of resources, such as capital or time, in the expectation of generating an income or profit.
- Understand accounting for investments and relationships between NFP organizations.
Verified Answer
Learning Objectives
- Understand accounting for investments and relationships between NFP organizations.
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