Cost Method Definition | Becker

Accounting Dictionary

Cost Method

An investor accounts for an investment in securities using the cost method if the investor does not have the ability to exercise significant influence over the investee (ownership of less than 20 percent is presumed to be a lack of significant influence). The rules of marketable equity securities are followed and the investment is generally carried at fair value through net income (FVTNI). See also equity method and investment in subsidiary and liquidating dividends.

Related Terms:

Equity Method [FARBAR]Investment in Subsidiary [FARBAR]Liquidating Dividends [FARBAR]Back to Dictionary

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