Knowiedge Check $01$

Which of the following statements about the adjustments made in the equity method are true?

Note: Select all that apply.

Check All That Apply

When the investor's expenditure to acquire an equity$-$method investment is less than the book value of the underlying net assets acquired,

additional adjustments to both the investment account and investment revenue might be needed.

"Amortizing the differential" refers to adjustment to bod $d_{\text{d}\text{i}\text{t}\text{h}}$ the investment account and investment revenue for differences between net

income reported by the investee and what that amount would have been if consolidation procedures had been followed.

The adjustments required are limited to depreciable and amortizable assets.

No adjustments are required for land or goodwill.