Video: Equity Method Investments Overview and Objectives

In this lesson, discover the intricacies of equity method investments with Nick Palazzolo, CPA, who unpacks when and how this method should be applied when acquiring significant ownership stakes in another company—typically ranging from 20% to 50%. Delve into the key distinctions between the cost method and equity method, and get to grips with identifying the circumstances that necessitate the use of the equity method for accounting purposes. Nick also walks through the process of calculating the carrying amount for these types of investments and crafting the associated journal entries, with a note on how to measure impairment losses, all while keeping the mood upbeat and the learning experience engaging.