Corporate Accounting - Methods for Accounting Investments in Subsidiaries

This video transcript discusses the different methods for accounting investments in subsidiaries in corporate accounting. It covers consolidation accounting, equity accounting, and financial investment method. The transcript explains how each method is useful for investors and the reporting requirements for each. No specific course or college/university is mentioned.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
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1CORPORATE ACCOUNTING
Video Transcript:
To account for the investment consolidation method should be adopted for accounting
the investment in the subsidiary asset. The subsidiary reporting is would help the equity
owned by the parent’s company on its accounts.
By taking into the consideration the consolidation level, elimination of transaction
must be adjusted for investment for overstating the sum of equity that is held by the parent
company. Elimination adjustment is established for holding the equity in parent company.
An investor can employ the elimination adjustment for the purpose of holding the
equity in the parent company. The method can be useful in eliminating the adjustment is
made with the purpose of setting off the intercompany transaction. The investors would
obtain the assistance of no double counting of the transaction at the consolidated level.
For consolidating the equity investment in Sydney Ltd the method of consolidation
accounting should be used to account for the investment. This method is useful for the
investor to apply influence on the investment that is owned by the owner.
The employer should not use the termination of the parent and subsidiary company.
The method is different from the consolidation method where entire control is exerted over
the investors over Sydney Ltd. The investors must use the cost of the asset to report it as the
investment in the asset. The investor can also occasionally test the impairment of the
investment.
To measure the investment for Melbourne Ltd equity accounting method can be
adopted for measuring the investment. For an investor to account for the investor, the method
is useful when the investors hold the significant influence on the investee but would not be
able to implement overall control.

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The investors cannot apply the overall control cannot be implemented between the
subsidiary and the parent company. This is because the investors hold significant amount of
influence on Melbourne Ltd. The investors can employ the equity method of accounting as it
helps in no consolidation and elimination procedure.
It is noteworthy to denote that the investors under the equity method of accounting
would be able to report its proportionate share of investment equity in the equity of investee.
Any form of profits and loss that would originate from the increase in the investment can be
accounted by proportionate share of investors in the investee.
To account for the investment in the Adelaide Ltd Consolidation Accounting Method
should be adopted to value the investment. An individual investor can use the financial
investment method to account for the financial investment in majority ownerships
investment.
The Consolidation method of accounting can be useful for the investor in
implementing effective control for making investment in the subsidiary company. The
investors own a minimum of 50.1% of the subsidiary share voting rights and this method can
be adopted to account to account for the parent company reporting subsidiary balances.
For determining the investment in Perth Ltd investment consolidation method of
accounting can be undertaken for consolidating the financial statements. The ownership of
investors is stands 25% of the issued capital for the Perth Ltd.
The consolidation method can be used by the investor by reporting the subsidiary
balances in the combined statement together with the balance of the parent company.

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