CFI is the official global provider of the The Financial Modeling & Valuation Analyst (FMVA)® accreditation is a global standard for financial analysts that covers finance, accounting, financial modeling, valuation, budgeting, forecasting, presentations, and strategy.Learn accounting fundamentals and how to read financial statements with CFI’s free online accounting classes.of 0,000 and a dividend of ,000 to its shareholders.When Lion makes the purchase, it records its investment under “Investments in Associates/Affiliates”, a long-term asset account. Lion receives dividends of ,000, which is 30% of ,000, and records a reduction in their investment account.Each of these corporations will continue to operate its respective business and each will issue its own financial statements.
(Since the purchases of electricity by MGC from NEP and the purchases of gas by NEP from MGC did not occur outside of the economic entity they are also eliminated.) The .
In such a case, investments will be accounted for using the cost method.