When Applying the Equity Method, How Is the Excess of Cost

question 85

Multiple Choice

When applying the equity method, how is the excess of cost over book value calculated and accounted for?

• A) The excess is allocated to the difference between fair value and book value multiplied by the percent ownership of current assets.
• B) The excess is allocated to the difference between fair value and book value multiplied by the percent ownership of total assets.
• C) The excess is allocated to the difference between fair value and book value multiplied by the percent ownership of net assets.
• D) The excess is allocated to goodwill.
• E) The excess is ignored.

---

Definitions:

Theodore Roosevelt

The 26th President of the United States, known for his progressive policies, leadership of the Rough Riders, and contributions to the conservation movement.

Japan's Claims

Assertions made by Japan regarding territorial ownership or rights, historically including disputes over islands and regions in East Asia and the Pacific.

Korea

A region in East Asia, historically unified but now divided into two distinct sovereign states: North Korea and South Korea.

Japanese Immigrant Population

Refers to people from Japan who have moved and settled in other countries, contributing to the cultural and demographic makeup of those nations.