Solution-Which of the statements is true under the equity

Which of the statements is true under the equity method

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Reference no: EM132568547

Question 1: Under the equity method, which of the following statements is true?

a. The parent's investment in the subsidiary is recorded at cost and is changed thereafter only if the value of the investment has been permanently impaired.

b. The parent records its pro rata share of the subsidiary's post-acquisition income as an increase to the investment account and reduces the investment account with its share of the dividends declared by the subsidiary.

c. The parent records its pro rata share of the subsidiary's cumulative earnings as an increase to the investment account and reduces the investment account with its share of the dividends declared by the subsidiary.

d. The parent's investment in the subsidiary is recorded at cost and reduced by any excess dividends declared by the subsidiary.

Reference no: EM132568547

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Which of the statements is true under the equity method

Reference no: EM132568547

Reference no: EM132568547

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