Question $2(1$ point$)$

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In its separate$-$entity statements, Waikoloa Inc. accounts for its wholly owned subsidiary Poipu Ltd$.$ using the equity method of accounting. Which of the following statements is true?

Consolidated net income will be less than Waikoloa's net income in its separate$-$entity statement of income.

Consolidated net income will be the same as Waikoloa's net income in its separate$-$entity statement of income.

Consolidated net income will be greater than Waikoloa's net income in its separate$-$entity statement of income.

Consolidated net income will be the same as Waikoloa's net income, only if the subsidiary does not pay dividend, and there are no fair value differentials at acquisition.