Equity Method of Accounting for Investments

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  • čas přidán 20. 07. 2015
  • This video uses a comprehensive example to demonstrate how to account for investments using the Equity Method. When an investor owns between 20% and 50% of a firm's stock, the investor is deemed to have significant influence and must recognize a proportionate share of the firm's earnings.
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Komentáře • 74

  • @Nott_Fifi
    @Nott_Fifi Před 10 měsíci +5

    when I was in university, I watched Michael's videos. Now I am on my CPA path and I come back without any hesitation. Thank you Michael!!!!

  • @Coriolanus359
    @Coriolanus359 Před 5 měsíci

    These are by far the best accounting/finance videos on CZcams. They take all the dryness out of the subject, it's likes you're out with a friend having drinks and they are explaining it to you on a cocktail napkin.

  • @binyan7282
    @binyan7282 Před 6 lety +50

    Michael's videos are the most helpful accounting videos I had ever seen, Thank you for your years' devotion!

  • @johnobtech
    @johnobtech Před 3 lety +7

    my man "Money Mike" explaining this better in 6 minutes than any other professor's 3 hours lecture.

  • @kerryfarrell8147
    @kerryfarrell8147 Před 7 lety +15

    reading the text makes it sound so overwhelming but these videos truly help to clarify and make it more usable information, thanks!

    • @Edspira
      @Edspira  Před 7 lety +3

      No problem! There is nothing more dry than reading an accounting textbook...

  • @charissed6746
    @charissed6746 Před 4 lety +7

    Saved hours of textbook reading by watching your video... thanks a million! With the basic understanding it will be much easier to understand the deeper concepts when reading additional study materials. Your channel is truly amazing!

  • @jordanmott8165
    @jordanmott8165 Před 7 lety +1

    My god you are a life saver! honestly the best accounting tutor on CZcams!!!

  • @enriquebn4853
    @enriquebn4853 Před 3 lety +1

    Day 2 of Accounting II. Your videos are gold. Thank you so much for these videos!

  • @rob8482
    @rob8482 Před 6 lety

    Always easy to follow, and the questions are always anticipated...well done!

  • @GeniusAjinkya
    @GeniusAjinkya Před měsícem +1

    Gosh, this helped me so much

  • @keithibarra3835
    @keithibarra3835 Před 7 lety

    thank u for explaining it shortly and precisely!

  • @lazarlogantheboi4590
    @lazarlogantheboi4590 Před 7 lety +6

    You are the best! LOVE your videos!!! Thank you so much!

    • @Edspira
      @Edspira  Před 7 lety +1

      Thank you for the kind words, you are awesome!

  • @ritikasalian8773
    @ritikasalian8773 Před 3 lety +2

    Thanks a lot sir...... your Videos are of great help....I am studying FAR right now, i always keep juggling between my own lecture videos and your videos....since your explanation is always simple and easy to understand

  • @mariag1926
    @mariag1926 Před 3 lety +1

    I'm studying for FAR right now. This is another great refresher!!!

    • @Edspira
      @Edspira  Před 3 lety

      I hope you ace the exam!

  • @marylynkoinakimisack2057
    @marylynkoinakimisack2057 Před 3 lety +1

    Thanks professor farhat for your help with your tutorials.

  • @khotsoapele3880
    @khotsoapele3880 Před 8 lety +4

    This was very helpful. I now understand how to apply the equity method when accounting for investment in associates. *chuckles* Thank you . :)

  • @safwanhaq6751
    @safwanhaq6751 Před 4 lety

    It really helped me to understand the concept. Thank You!

  • @WithSeb
    @WithSeb Před rokem +1

    Protect this man at all cost

    • @Edspira
      @Edspira  Před rokem

      Thank you for bringing a smile to my face!

  • @lilong5202
    @lilong5202 Před 4 lety +1

    You saved my life. Thank you

  • @caitlynbowman6897
    @caitlynbowman6897 Před 7 lety

    This is great! Thank you!

  • @bigb6475
    @bigb6475 Před 2 lety

    Thank you Michael.
    Great videos!

  • @MyFinancialFocus
    @MyFinancialFocus Před 2 lety +1

    Love this channel! Thanks for the info

  • @Alexis96650
    @Alexis96650 Před 4 lety +2

    i like your videos but i wished it covered a little deeper. For instance, under the equity method, we should also account for asset differences adjustment and goodwill if applicable. Also, examiners trick people in areas where the investor initially owned less than 20% and later that year, the investor purchased more common stocks to bring his position to more than 20%.
    Also an investor can own less than 20% in an an investee and still use equity method if such investor shows signs of exercising significant influence. Also you could clarify that in determining significant influence, preferred stocks are not used, common stocks only.

  • @nigelsapalit43
    @nigelsapalit43 Před 2 lety

    Excellent explanation.. Love it..

  • @Carol_-tv6jv
    @Carol_-tv6jv Před 6 lety

    Your videos are SO helpful, thanks!

    • @Edspira
      @Edspira  Před 6 lety

      Awesome! Thanks for watching :)

  • @rachelhartter
    @rachelhartter Před 6 lety +1

    thank you for making these videos! you're a huge help!!

    • @Edspira
      @Edspira  Před 6 lety

      No problem. Thanks for watching!

  • @3650days
    @3650days Před 8 lety +3

    Very helpful. Thank you!

    • @Edspira
      @Edspira  Před 8 lety +1

      +3650days No problem. Have a nice winter break!

  • @joshmodika1502
    @joshmodika1502 Před 6 lety +2

    Thank you! {Pretoria, South Africa}

  • @maximasforrester8689
    @maximasforrester8689 Před 2 lety

    This helped thanks so much

  • @blackm9063
    @blackm9063 Před rokem

    Thanks for the video

  • @davida99
    @davida99 Před rokem +1

    Amazing!!

  • @luosen856
    @luosen856 Před 6 lety

    thank you

  • @lala2534
    @lala2534 Před 7 lety +1

    Thank you!

  • @fahedalyafiy6215
    @fahedalyafiy6215 Před 6 měsíci

    Thank you

  • @mariamulleruhrskovpedersen3480

    Great video!

  • @michielpro
    @michielpro Před 2 lety

    Thanks bro!

  • @bhavikupadhyaya972
    @bhavikupadhyaya972 Před 2 lety +1

    God bless you

  • @ontopp247
    @ontopp247 Před 3 lety +1

    helpful and quick. thanks!

  • @nrjadeja
    @nrjadeja Před 7 lety +1

    Your videos are a HUGEEEEEEEEE help...You know how to explain and how to make it easy for others to understand...pls post videos for spin-off, split-off. Thank you.

  • @Izmar_amranumigarovich

    Sir i want to ask if we buy stock with equity method whether we must write the agio ( share premium ) or not or just buying price? Please answer i don't find a lot of sources of my question.

  • @samuelkwon5824
    @samuelkwon5824 Před 7 lety

    Thanks for this video! New to all this. Why are we getting a portion of this dividend being paid out to $10,000? What if that dividend was going to someone else? Does the 40% give us a claim to all dividends?

  • @maxohara1967
    @maxohara1967 Před 7 lety +3

    Any possibility of creating some videos showing other consolidation methods like for example investments in companies with a share over 50% or buying a complete company? Thanks ever so much.

    • @Edspira
      @Edspira  Před 7 lety

      I don't currently have any videos for these topics, but I plan to make videos on these topics in the next couple of months. Thanks so much for watching!

  • @DG-ty2xy
    @DG-ty2xy Před 8 lety +1

    i cannot speak a very good english but i still understood it! thanks

  • @angelynewa2143
    @angelynewa2143 Před 3 lety

    May I ask accounting question regarding investment? when should I recognise investment in associates and subsidiaries? At the time of acquisition? Or issuance of share certificates? Or otherwise?

  • @liaoziqi2460
    @liaoziqi2460 Před 6 lety +1

    not sure if this is because of the change of text book, but my text book says different from your video: if the company reports a net income, you dr. equity in affiliate earnings instead of investment revenue. (not sure if I am correct about this either, just a concern)

    • @Edspira
      @Edspira  Před 6 lety +2

      When recording net income in the video, I debited Investment in Tom's Surf Shop and credited Investment Revenue. Investment in Tom's Surf Shop is an equity account. Thus, "equity in affiliate earnings" is another way of stating "Investment in affiliate", or Tom's Surf Shop in this instance. Great question!

  • @mariag1926
    @mariag1926 Před 5 lety

    Is there a video for consolidation method for investments ?

  • @rj-conceptclarityclasses236

    One suggestion that kindly enhance bold your handwriting....
    Other things are good, nicely explain 👍

  • @furqaanmustafa3871
    @furqaanmustafa3871 Před 8 lety

    hi Michael, i saw your trading securities and available for sale ones. but any videos for Held to Maturity? just trying to understand how that works.

    • @Edspira
      @Edspira  Před 7 lety

      Yes. Below are links to the videos. Thanks for watching!
      Amortize a Bond Discount: czcams.com/video/O2W935hzYpQ/video.html
      Amortize a Bond Premium: czcams.com/video/meaqidbXHRY/video.html

  • @ryanmiguelsalinas2495
    @ryanmiguelsalinas2495 Před 5 lety +1

    Good day sir! When you received a dividend, why does it decreases your investment??

    • @sashith4131
      @sashith4131 Před 3 lety

      because the dividend payment decreases the retained earnings

  • @Andrew6James
    @Andrew6James Před 4 lety

    Is 'Investment Revenue' a IS line item?

  • @zackd7597
    @zackd7597 Před 2 lety

    What happens if there is goodwill?

  • @omario8822
    @omario8822 Před 7 lety

    Why did you minus 4000? I thought that 4000 belonged to the Investor so therefore it would add 4000

  • @danialmoese1300
    @danialmoese1300 Před 6 lety +1

    thank you