Under the equity method, which of the following statements is TRUE?

Question 15Select one:

a.

The investor's investment in the associate is recorded at cost and reduced by distributions from the associate.

b.

The investor's investment in the associate is initially recorded at cost and subsequently adjusted for the parent's pro rata share of the post -acquisition change in the net assets of the associate.

c.

The investor records its pro rata share of the associate's cumulative earnings as an increase to the investment account and reduces the investment account with its share of the dividends declared by the associate.

d.

The investor's investment in the associate is initially recorded at cost, and only changed subsequently if there has been a permanent impairment in the value of the investment.