Question

10% Ownership 3. Under which method of accounting used by the parent prior to consolidation will the parent's net income equal the consolidated net income? a. Equity Method b. Partial Equity Method c. Initial Value Method d. Fair Value Method 4. Under the equity method, the investor should account for Income from Discontinued Operations from the investees with: a. A footnote disclosure only b. The ordinary income from the investee c. With its Income from discontinued operations d. An adjustment to retained earnings only a. 5. Which one of the following accounts would not appear in the consolidated financial statements at the end of the first fiscal period of the combination? Investment in subsidiary b. Revenue Goodwill d. Customer List c.

Answer 1

Requirement 1(Question no.3 per screen above):-

The correct answer per the question above is Option A - Equity method. Equity method is the method where the income of the subsidiary is adjusted to the income of the parent. For consolidated net income, net income adjustment is eliminated but each Revenue and expense of subsidiary is reported and combined with consolidated adjustment. Hence, both the net income and consolidated income are generally equal.

Option B, Option C and Option D are all incorrect as they do not result in same Net Income nad consolidated net income.

Kindly note that i have answered the first question per the HOMEWORKLIB RULESs. Request you to post the remaining question separately so that we can answer them as well. All the best and please let me know if you have any questions via the comments section .