Applying the cost approach For February 2, the equity shares journal entry will be Bank A/c Dr. 9,77,900. A/C 9,77,900 equity share application dated March 17; address: 3,87,450 3,87,450 to Bank A/c Application for equity shares dated May 17: Dr. 2,67,200 to Bank A/c 2,67,200.
In a company's financial accounts, certain investments are recognized using the cost method of accounting. This strategy is used when an investor holds a security over which it has little or no influence, often expressed as owning less than 20% of the firm.
The cost of the investment is listed by the investor as an asset. When received, dividend income is recorded as income and shown on the income statement. Receiving a dividend also increases cash flow in both the investment and operating sections of the cash flow statement.
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