🏛️Equity investments represent ownership in an entity.
💰There are three accounting methods for equity investments: the cost method, the equity method, and the consolidation method.
📊The cost method is used when ownership and influence are not significant.
🤝The equity method is used when ownership and influence are between 20% and 50%.
🌐The consolidation method is used when ownership and influence exceed 50%.
What are equity investments?
—Equity investments represent ownership in an entity. When a company has an ownership interest in another company, it owns equity in that company.
What are the three accounting methods for equity investments?
—The three accounting methods for equity investments are the cost method, the equity method, and the consolidation method.
When is the cost method used?
—The cost method is used when the level of ownership and influence is not significant, usually less than 20%.
When is the equity method used?
—The equity method is used when the level of ownership and influence is between 20% and 50%.
When is the consolidation method used?
—The consolidation method is used when the level of ownership and influence exceeds 50%.
00:07Equity investments represent ownership in an entity. The level of ownership and influence determines the appropriate accounting method.
00:22There are three accounting methods for equity investments: the cost method, the equity method, and the consolidation method. The differences between these methods relate to the level of ownership and influence.
00:55The cost method is used when ownership and influence are not significant, usually less than 20%.
01:12The equity method is used when ownership and influence are between 20% and 50%.
02:09The consolidation method is used when ownership and influence exceed 50%.
