Grant Corporation has owned 40% of the voting stock of Halliday Company for many years, originally purchased at book value and reported using the equity method. At the beginning of the current year, the carrying value of the investment is $2,000,000. Halliday reports a loss of $6,000,000 for the year, and the loss is considered other than temporary. What amount should Grant report as equity in the net loss of Halliday for the current year?

Question

Quizplus · Accepted Answer

40% x $6,000,000 = $2,400,000, but losses that result in a negative balance for the investment are not reported if they are considered other than temporary.

Grant Corporation Has Owned 40% of the Voting Stock of Halliday