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Company P Company Uses the Equity Method to Account for Its

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Company P Company uses the equity method to account for its January 1, 20X1, purchase of 30% of Company S's common stock. On January 1, 20X1, the market values of Company S's FIFO inventory and land exceed their book values. How do these excesses of market values over book values affect Company P's reported equity in Company S's 20X1 earnings? Company P Company uses the equity method to account for its January 1, 20X1, purchase of 30% of Company S's common stock. On January 1, 20X1, the market values of Company S's FIFO inventory and land exceed their book values. How do these excesses of market values over book values affect Company P's reported equity in Company S's 20X1 earnings?

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The excess inventory will decrease inc...

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