The Law Dictionary

Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed.

What is EQUITY METHOD

The way investments in subsidiaries is tracked by a parent company. The profits and losses are posted on separate accounts for each subsidiary as a balance sheet. This begins from the time of acquisition through liquidation or sale. Each subsidiary balance sheet is an account entry in the parent firm records of the investment in its balance sheet. Known also as equity accounting. Refer to cost method.

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