Question

"Sisk Company has owned 10 percent of Maust Inc., for the past several years. This ownership did not allow Sisk to have significant influence over Maust. Recently Sisk acquired an additional 30 percent of Maust and now will use the equity method. How will the investor report change

Answer 1

Sisk Must recognise an Associate and report profits from its associate.

Step-by-step explanation:

The 10 percent owenership of Maust Inc does not allow Sisk to have significant influence thus, this is a Financial Asset (Equity Instrument of Another Entity).

When Sisk acquired an additional 30 percent of Maust, Sick will have Significant Influence. Maust will be an Associate Entity of Sisk (40%).

Sisk Must recognise an Associate and report profits from its associate.