When a Company Applies the Partial Equity Method in Accounting

question 63

Multiple Choice

When a company applies the partial equity method in accounting for its investment in a subsidiary and initial value, book values, and fair values of net assets acquired are all equal, what consolidation worksheet entry would be made?
A. Retained earnings
Investment in subsidiary

B. Investment in subsidiary
Retained earnings

C. Investment in subsidiary
Equity in subsidiary's income

D. Investment in subsidiary
Additional paid-in capital

E. No entry is necessary.

• A)A above
• B)B above
• C)C above
• D)D above
• E)E above

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Definitions:

Forming Department

This is a specific section within a manufacturing facility where raw materials are shaped into components or products.

Equivalent Unit

a concept used in cost accounting to represent a partial unit of production, allowing for the calculation of costs for partially completed products.

Process Costing

An accounting methodology used to allocate costs to units of product in continuous processes or industries where identical products are produced.

Conversion Costs

The total expenses of manufacturing overhead and direct labor required to transform raw materials into finished products.