Big debits the expense account “permanent loss of Little Corp.” and credits the investment account for 0,000.
Based in Greenville SC, Eric Bank has been writing business-related articles since 1985. To record the sale, the investor must first book any accrued investee income and dividends attributable to the sold shares.It then records the sale, including any gain or loss.A company uses the equity method of accounting when it has significant influence over a company in which it has invested. Ownership of more than 50 percent normally requires a different accounting method called the subsidiary method. generally accepted accounting principles assume that such influence exists if the investing company owns between 20 and 50 percent of the investee’s voting shares, though exceptions can occur.