Would you expect the consolidated income statement to report higher net income than shown in the parent's separate financial statements? Explain.

A.

Usually the parent uses the equity method on its parent-only income statement to account for its ownership interest in subsidiaries and then consolidates all subsidiaries at the end of the year for reporting to the SEC and investors. Net income and the individual line items differ in amount between the two sets of statements.

B.

Usually the parent uses the cost method on its parent-only income statement to account for its ownership interest in subsidiaries and then consolidates all subsidiaries at the end of the year for reporting to investors. While net income is identical on the parent's separate income statement and on consolidated statements, the individual line items differ in amount between the two sets of statements.

C.

Usually the parent uses the equity method on its parent-only income statement to account for its ownership interest in subsidiaries and then consolidates all subsidiaries at the end of the year for reporting to the SEC and investors. While net income is identical on the parent's separate income statement and on consolidated statements, the individual line items differ in amount between the two sets of statements.

D.

Usually the parent uses the market method on its parent-only income statement for reporting to investors. While net income is identical on the parent's separate income statement and on consolidated statements, the individual line items differ in amount between the two sets of statements.