Record the initial investment in Sub
Equity Method
Dr: Investment in Sub Corporation
Cr: Cash
Cost Method
Dr: Investment in Sub Corporation
Cr: Cash
Record Parent company’s 100% share of Sub Corporation’s
Year 1 Net Loss
Equity Method
Dr: Income from Sub Corporation
Cr: Investment in Sub Corporation
Cost Method
No Entry
Record Parent company’s 100% share of Sub Corporation’s
Year 2 income
Equity Method
Dr: Investment in Sub Corporation
Cr: Income from Sub Corporation
Cost Method
No Entry
Record Parent company’s 100% share of Sub Corporation’s
Year 2 dividends
Equity Method
Dr: Cash
Cr: Investment in Sub Corporation
Cost Method
Dr: Cash
Cr: Dividend Income
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