TORALDE, MA.KRISTINE E.

CBET-01-601A

In this video the presenter discusses about accounting for investment in subsidiary, it is

actually familiar to me because it is discussed in our previous accounting subject. In the

video, the presenter explained that the initial measurement of an investment in subsidiary

is at cost no matter what he only differs when there are transactions that affect the

investment in subsidiary. And how the cost of investment in a subsidiary varies using the

two different methods which are the cost method and equity method, she also provided a

comparison of entries under cost method and equity method. We can see that under cost

method the cost of investment in subsidiary does not change, that any transaction about

investment in subsidiary does not affect the cost of investment unless there is an

impairment of investment in subsidiary which reduces the cost of investment. While under

equity method the cost of investment in subsidiary increases when there is a share in net

income or it decreases when there’s a net loss, under cash or property dividends the

investment in subsidiary decreases because it is presumed that that dividend is a return

in investment and a decrease when there’s an impairment in investment in subsidiary.

And what I also like in this video is that he emphasized what item can be seen in the

parent financial statement that cannot be seen in the consolidated financial statement

and vice versa, and for me it is good because it is easier to remember. She also gives an

example per topic which is good so that we can have an idea on how to apply those

procedures to the problem itself. That's what I learned about these Learning Resource 4

videos.