Equity Method from A to Z: Part 1 of 2

[@XMegaJuni]

Quick question, the equity in investee income account, is a revenue account account correct? As said 15:21 So what happens if say the investee which you bought 20% interest at $200,000 in excess of book value of net assets doesn't have any income and doesn't have any dividend payments. At the end of the accounting period you would armotized those identifiable excess costs into expense by reducing your investment in investee account and equity in investee income. Under this situation, the account would have an ending debit balance. Would we refer to this account now as a contra-revenue account? Or is it a moot point to think about it that way. I ask because another account, like an allowance can be an adjunct account when it has a certain balance, then a contra for the opposite.

[@antonmursid3505]

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[@Virknavdeep11]

Hi Professor, why didn't we calculate Implied value? is book value $700k means implied value?

[@chadkufro2336]

Very helpful! Thanks professor

[@AccountingLectures]

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[@michaelmorones2926]

You should've demonstrate or show the whole process for the full table, because I made my own table using/following your method the last column (for the $240k), the following lines for year 2021 and 2022 does not match the numbers in the table.

[@ahmadalsouqi7572]

Do we record goodwill by debiting goodwill 20K and crediting Investment in associate or affiliate account 20K???