Reference no: EM132281847

Question no. 1 - 150 words with reference.

1) Allowing the patient to incorporate their culture and religion into their care would seem beneficial to the overall recovery of the patient. How does it work if the culture and religion conflict with the care the hospital is trying to give?

Question no. 2 - 200 words with reference.

Please read and respond the statement.

2) (DaNy) Since Duke Corporation sold a portion of the stock to an outside party, the company could lose their controlling share of Salem Company. In this case Duke will adjust their books of accounts for investment value in order to establish exact gains on this transaction and define the correct value of assets and liabilities in the books of accounts. Then they will account for the loss or gain of the selling of the stock to an outside party in their books of accounts. If Duke Corporation still maintains control over Salem Company, they will not recognize the gain or loss from the sale of the stock, and any amount above their invested value will be recognized as additional paid in capital from Duke and will increase the company's investment in the Salem Company. Duke will have to adjust this investment in their books of account prior to the actual transaction to ensure that it generates the additional paid in capital accurately.

The adjustment is due to the company selling a portion of its investments, it has to adjust or remove the carrying value of that investment from its investment account. The associated carrying value is based on the application of the equity method. If the initial value or partial equity method was utilized the selling firm must restate the account to the equity method before recording the sale. This will also need to be done to the operations of the current period occurring prior to the sale. The parent firm can record the difference between the sale proceeds and the carrying value of the shares sold as an adjustment to the parent company's additional paid in capital (Doupnik, 2017, pp. 181-4). The relationship between the parent firm and the affiliate will determine the accounting method that will be utilized. If Duke maintains control, then a consolidation will be necessary, but if the parent firm can influence the decision making of the company, then the equity method will be utilized. If Duke has lost all influence, then the fair value method can be utilized.

We know from our previous discussion that the equity method is utilized when the investment percentage is between twenty to fifty percent, unless the firm can prove that they hold no significant amount of control over the company being invested into. This method allows the recording of the investor's share of the affiliate's income and reports the investors portion of the affiliate's net income as its income and increases the investment account by that amount. The receipt of dividends by the investor is treated as a reduction of the investment account instead of as revenue. The investment account will not reflect a change in the fair value of the held securities at the end of the account period. If the securities are sold, then the difference between the book value and cash received will be recorded as either a gain or a loss on the sale of the investments on the income statement (Libby, 2014, pp. E-16). The other option is the fair value, which limits the possibility of manipulation of net income

Question no. 3 - 200 words with reference.

Please read and respond the statement.

3) (Rodner) Before answering the fundamental questions of this forum, we need to be clear regarding the relationship between a subsidiary and its parent. Given the definition of a subsidiary which is a company owned and controlled by another company, we can say that the subsidiary is the investee (the controlled company and the parent company is the investor (the owning company). But we have to precise that a parent does not only own a subsidiary it also runs it and has operations of its own. Now we can understand that Duke Corporation owns and runs Salem Company. As it is stated in the forum outline, the control that Duke Corporation has over Salem Corporation is due to the fact that it acquired a significant portion of the subsidiary shares at a given time. But when we know that subsidiaries share is negotiable, it is easy to understand that the parent company can decide to sell its Salem detained shares at any given time.

As you know, this transaction cannot be made without adjustment in the book of the parent company. So, after the cession of a portion of its part in Salem Corporation, it is an imperative for Duke Corporation to adjust its accounting book. This adjustment must be made by removing the carrying value of the shares sold to outside party from its investment account. It should be noted that we have to consider the equity method of accounting for investment in this transaction before the adjustment and in making the adjustment. In other words if for some reason the carrying value of this investment was established according to the initial value method or the partial equity method, Duke Corporation must reestablished the carrying value of this investment under the equity method before recording this transaction in its accounting book.

After selling a portion of its part in Salem Corporation, Duke Corporation must reconsider its relationship with Salem. The new relationship between the two companies can be viewed according to three scenarios. Under the first scenario we agree that duke retain the control of Salem Corporation. In this scenario the balance of the carrying value of Duke Investment must be accounted according to the consolidation method of accounting. Let say in the second scenario that Duke has only significant influence over Salem Corporation; in this scenario the equity method of accounting for investment must be applied. The third scenario is that Duke Corporation can lose the control and even the significance influence over Salem Corporation. In this scenario, the fair value method of accounting for investment must be applied. Under this method, Duke must create a non current asset for the purchase price of its Salem Corporation shares. But the carrying value of those shares which constitutes its investment must be adjusted periodically to reflect the fair value of Salem Corporation shares.