Using the cost method, an investment in a subsidiary is shown as an asset, while using the equity method, it is shown as part of shareholders' equity.

Question

Quizplus · Accepted Answer

Under both the cost method and the equity method, an investment in a subsidiary is recorded as an asset on the investor's balance sheet. The difference lies in how the investment's value is adjusted over time, not in its classification as an asset or equity.

Using the Cost Method, an Investment in a Subsidiary Is