Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2018. On that date, Paars equipment (10-year remaining life) has a book value of $420,000 but a fair value of $520,000. Kimmel has equipment (10-year remaining life) with a book value of $272,000 but a fair value of $400,000. Paar uses the equity method to record its investment in Kimmel. On December 31, 2020, Paar has equipment with a book value of $294,000 but a fair value of $445,200. Kimmel has equipment with a book value of $190,400 but a fair value of $357,000.

What would be the impact on consolidated balance for the Equipment account as of December 31, 2020 if the parent had applied the initial value method rather than the equity method?

A.) The consolidated Equipment account would have a higher reported balance.

B.) The balance in the consolidated Equipment account cannot be determined for the initial value method using the information given.

C.) No effect: The method the parent uses is for internal reporting purposes only and has no impact on consolidated totals.

D.) The consolidated Equipment account would have a lower reported balance.