Question
Under the cost method, which of the following statements is TRUE? a. The parent's investment in the subsidiary is recorded at cost and reduced by
Under the cost method, which of the following statements is TRUE?
a. The parent's investment in the subsidiary is recorded at cost and reduced by its pro rata share of liquidating dividends received from the subsidiary.
b. The parent's investment in the subsidiary is recorded at cost, and only changed thereafter if there has been an impairment loss on the investment.
c. The parent records its pro rata share of the subsidiary's post-acquisition earnings as an increase to the investment account and reduces the investment account with its share of changes to the acquisition differential.
d. The parent's investment in the subsidiary is recorded at cost and adjusted for changes in the parent's proportionate interest in the subsidiary's other comprehensive income.
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