Influence, not the percentage owned, decides where six holdings land; the AC302 Unit 7 investment classification problem shows it across a composite engineering firm's portfolio. Searches like "ac 302 unit 7 assignment example", "ac302 unit 7 sample" and "ac302 unit 7 example" land here.
What a finished AC302 Unit 7 investment classification problem looks like
A decision table, six measurement schedules and a summary of effects. The table lists each holding with its percentage, the facts bearing on intent or influence, the category and the measurement basis. Treasury notes bought to sell within months are trading; corporate bonds with no plan to sell are available for sale, their 12,500 gain sent to other comprehensive income; municipal bonds the firm will hold go to amortized cost. A 12 percent interest in a sensor supplier, with two of seven board seats and a contract carrying most of the supplier's sales, takes the equity method and reaches 1,032,000. A 28 percent stake in a startup run by a 65 percent holder, who refused the firm a seat, stays outside it. A listed 5 percent holding goes to fair value.
How a AC302 Unit 7 example is structured
The problem is ordered by the first question a classifier asks: debt or equity. Debt securities come first and are sorted by intent, the only test that applies to them, into trading, available for sale and held to maturity. Equity holdings follow, sorted by influence and control, with the percentage cited only as the presumption the facts can overturn. The two inverted cases get a paragraph each, naming the ASC 323 indicators that decide them: board representation, participation in policy, material intercompany transactions and technological dependency. Each measurement schedule then shows cost, the year's change and the ending amount. The summary splits the effects between net income, a total of 294,000, and other comprehensive income of 12,500, so a reader sees which holdings will move reported earnings next year.
Debt, sorted by intent
Treasury notes held for trading, corporate bonds available for sale, municipal bonds held to maturity. Similar instruments land in three categories because the firm's plans for them differ.
Twelve percent with influence
Two board seats and a supply contract carrying most of the supplier's revenue give significant influence. Cost of 900,000 plus a 180,000 share, less 48,000 of dividends.
Twenty-eight percent without it
A controlling holder who refuses the firm a seat and ignores its proposals overcomes the presumption. The stake is measured under the alternative for shares lacking a quoted price.
Remeasured on an observable price
An orderly sale of identical startup shares at a higher price lifts the carrying amount from 600,000 to 690,000, and the 90,000 gain reaches net income.
Where each change lands
Net income absorbs 294,000 from the equity share, the trading loss and two equity gains; other comprehensive income holds the 12,500 on the corporate bonds.
Where marks go in AC302 Unit 7
Classifying by percentage alone costs the most, because the problem is built so that both boundary holdings reverse the default: the 12 percent stake has significant influence and the 28 percent stake does not. Graders read an answer that follows the 20 percent line as having missed the unit's point. Applying trading, available-for-sale or held-to-maturity labels to equity shares is the next deduction, since those categories have covered only debt since 2018. Sending the listed shares' 28,000 gain to other comprehensive income repeats that error. Equity-method schedules that record dividends as income, rather than as a reduction of the investment, overstate income by 48,000. Measuring the startup stake at fair value without noting the alternative for shares lacking a market price loses a smaller amount.
Get a AC302 Unit 7 example written to your instructions
List every holding in your Unit 7 problem with its percentage and whatever the problem says about intent, board seats, contracts or quoted prices, and attach the rubric and any textbook edition the section uses. Classification, measurement schedules and the income summary are returned in 24-48h, built on your holdings. There is no charge for a first custom sample.
AC302 Unit 7 questions, answered
When does a holding under 20 percent get the equity method?
When the facts show significant influence despite the smaller stake. ASC 323 lists indicators such as representation on the board, participation in policy decisions, material transactions between the two companies, interchange of managers and technological dependency. A 12 percent holder with two board seats and a supply relationship carrying most of the investee's sales usually meets that test, and the AC302 sample names which indicators decided it.
What happened to available-for-sale equity securities?
The category was removed for equity by the 2016 financial instruments update, effective for most public companies in 2018. Equity securities with a readily determinable fair value now go to fair value through net income, and those without one may use the measurement alternative: cost, less impairment, adjusted for observable price changes in orderly transactions. Older problems may still use the retired category, and the sample flags that difference.
Why are equity-method dividends not income?
Because the investor already recognized its share of the investee's income when the investee earned it. A dividend distributes part of that income as cash, converting some of the investment into cash rather than adding to earnings. Recording it as income would count the same profit twice. In this problem the 48,000 received reduces the carrying amount to 1,032,000.