Find how xyz company account for the loss and investment

Assignment Help Financial Accounting

Reference no: EM132749862

Problem 1: XYZ Company purchased 25% of the common stock of West Co. for $5 million dollars and uses the equity method to account for the investment. In the first year of the investment West Co. reported a net loss of $15 million. In the second year West Co. reported a net loss of $10 million. Recording its full share of West Co.'s loss in year two would cause XYZ Companies investment to have a negative carrying value. XYZ Company has no other investments, and has given no other financial support or commitments to West Co. How should XYZ Company account for the loss and its investment in Pack Co.?

Reference no: EM132749862

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