2. Consolidated financial statements are not affected by whether the parent uses the simple equity, sophisticated equity, or cost method to record its investment in the subsidiary. a. True b. False 3. Dividends reduce the investment account under the equity method and increase the investment account under the cost method. a. True b. False 4. At the end of the first year of operations, it is not necessary to convert a cost method investment to the equity method. a. True b. False 5. Amortization of excess affect both the NCI share and the parent share of subsidiary income a. True b. False 6. When a subsidiary's plant assets are revalued, the depreciation method and remaining life used by the subsidiary must be continued by the parent a True b. False 7. Previous years consolidation adjustments and eliminations are reflected in the current-year trial balances of the parent and subsidiary a. True b. False 8. Using the cost method to record an investment assures that every dollar of change in subsidiary equity is recorded on a pro rata basis in the investment account a. True b. False 9. When the sophisticated equity method is used, only current-year amortizations of excess are made on the consolidated worksheet a true b. False