Borrow: long-term equity investment
Loans: bank deposits
If there is a loss, how to reflect the amount of the loss through cash reduction? If you use the equity method, you can share the corresponding losses according to the shareholding ratio.
Borrow: investment income
Loan: long-term equity investment
If the investment gains and losses are accounted for by the cost method, the losses will be recognized when the investment is disposed of.
Related information:
Confirmation of investment profit and loss by equity method
After an investment enterprise obtains a long-term equity investment, it shall confirm the investment profit and loss according to its share of the net profit and loss realized by the invested entity and adjust the book value of the long-term equity investment.
On the basis of the book net profit of the investee, the following factors should be considered for appropriate adjustment:
(1) If the accounting policies and accounting periods adopted by the investee are inconsistent with those of the investing enterprise, the financial statements of the investee shall be adjusted according to the accounting policies and accounting periods of the investing enterprise.
(2) Depreciation or amortization based on the fair value of the fixed assets and intangible assets of the investee at the time of investment acquisition, and the impact of the amount of asset impairment reserve determined based on the fair value of the investee at the time of investment acquisition on the net profit of the investee.
(3) In addition to considering the adjustment of fair value, it should also offset the unrealized gains and losses of internal transactions between the investment enterprise and its affiliated enterprises and joint ventures. The offset of unrealized gains and losses in internal transactions includes downstream transactions and counter-current transactions. However, the unrealized internal transaction losses that have occurred belong to the impairment losses of the transferred assets, and the related unrealized internal transaction losses should not be offset.
20 10 added teaching material: the treatment of gains and losses arising from the joint venture's investment in non-monetary assets. ?
Long-term equity investment cost method refers to the investment method based on cost. Under the cost method, long-term equity investment is priced at the initial investment cost, and its book value is generally not adjusted. The cost of long-term equity investment should be adjusted only when the liquidation dividend is received, and the investment is added or recovered.
Under the cost method, long-term equity investment should be measured at the initial investment cost. When increasing or recovering investment, the cost of long-term equity investment should be adjusted. Cash dividends or profits declared by the investee, regardless of whether the relevant profit distribution belongs to the net profit distribution realized by the investee before or after the investment, are recognized as the current investment income.
For the above-mentioned four types of equity investment, when an enterprise adopts long-term equity investment accounting, if it meets the first and fourth types of equity investment, the enterprise shall adopt cost accounting, and vice versa.
The so-called cost method means that the long-term equity investment should be accounted according to the initial investment cost, and the long-term equity investment of the investing enterprise will not be adjusted with the increase or decrease of the equity of the invested unit.