Cost Method

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August 25, 2024 4 min read Definitions

Cost Method: Accounting for Investments in Subsidiary Companies

Accounting Finance Cost Method Accounting Investments Subsidiary Companies Equity Method

Understanding the Cost Method in accounting, where a parent company records its investments in subsidiary companies at cost, not recognizing periodically its share of subsidiary income or loss. This method is used when the parent owns less than 20% of the subsidiary's outstanding voting common stock or in instances of significant influence without effective control.

August 25, 2024 4 min read Definitions

Retail Inventory Method: Inventory Technique Using the Cost Method of Accounting

Accounting Finance Inventory Method Cost Method Retail Inventory Physical Inventory Book Inventory

The Retail Inventory Method is an inventory technique that estimates the cost of inventory by applying an average percentage of cost to the retail price of merchandise. This method can use either physical inventory counting or a perpetual inventory system.