The cost method recognize the precision

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You have recently become the controller of precision corporation, a manufacturing enterprise that has begun a program of expansion through business combinations. on February 1, 2008, two weeks prior to your controller ship appointment, precision had completed the acquisition of 85% of the outstanding common stock of Sloan discussion with precision's interest in Sloan company's operating results. the chief accountant strongly support the cost method of accounting, offering the following arguments:

a. the cost method recognize the precision and salon are separate legal entities.
b. the existence of 15% minority interest in Sloan requires emphasis on the legal separateness of the two companies.
c.use of equity method of accounting might result in precision's declaring dividend to its shareholders out of "paper" retained earning that belong to sloan.
prepare a rebuttal to each of the chief accountants argument.

Reference no: EM13670268

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