Q5. Short Answer Why is the credit to the Investment in Subsidiary for $668,000 the same as the entry (to eliminate the investment in subsidiary account) used in the Cost Method After Year of Acquisition (both were for a $668,000 credit)?

COST METHOD Recording the initial Investment in subsidiary is the same whether the Cost Method or the Equity Method is applied Debit Credit Account $1,000,000 nvestment in Subsidiar $1,000,000 *Cash The method of payment in this example is cash, but other sources of funds could also be used to pay for the investment (i-e. issuance of stock. Maintaining the Investment in Subsidiary is where significant differences exist between the Cost Method and Equity Method, creating the need for different wor entries. Maintaining kpaper