Concept explainers
Equity investment:
Equity investments are stock instruments which claim ownership in the investee company and pay dividend revenue to the investor company.
Cost method:
Cost method is the accounting method used for accounting equity investments which claim less than 20% of the outstanding stock of the investee company.
Equity method:
Equity method is the accounting method used for accounting equity investments which claim a significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
To indicate: The differences between accounting for dividend revenue under
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