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Equity Investment Accounting Methods

When a business needs to raise money, a common option is to sell investors a stake in the company by issuing shares of stock. By owning stock, investors become part owners in the company and are entitled to a portion of all assets and earnings, depending on their percentage of ownership. As corporate earnings increase, stock prices also increase, so investors would have to pay more to have ownership stake in the company. Often, it is necessary to enlist the assistance of an expert accountant to keep this financial information organized and wisely invested.

Types of Accounting Methods

When a company owns at least twenty percent stake in another business, it must account for that stake in the books using accounting methods that depend on what percentage the company owns. Some of the accounting methods a corporation might utilize are:

  • The cost method
  • The equity method
  • The consolidation method

To avoid critical errors in your company’s financial statements that could endanger your company, shareholders and future employees, a qualified Austin accountant can help you with all your bookkeeping, financial planning and account management needs.

Contact an Austin Accountant for More Information

If your business is considering equity investing or you need assistance on any of your business’s financial situations, the professionals at Austin Accounting offer a reliable and skilled service. Fill out the contact form on this page to get in contact with an Austin accountant that specializes in whatever your personal or business financial needs may be.