When a Parent Uses the Equity Method Throughout the Year

question 19

Multiple Choice

When a parent uses the equity method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet?

• A) Parent company net income equals controlling interest in consolidated net income.
• B) Parent company retained earnings equals consolidated retained earnings.
• C) Parent company total assets equals consolidated total assets.
• D) Parent company dividends equals consolidated dividends.
• E) Goodwill will not be recorded on the parent's books.

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Definitions:

Legal Title

A formal recognition or designation that establishes ownership or an official position within a legal framework.

Preliminary Emancipation Proclamation

An executive order issued by President Abraham Lincoln in 1862 during the American Civil War that declared the freedom of all enslaved people in Confederate-held territory starting January 1, 1863.

Union Victory

The success of the United States (the Union) over the Confederate States in the American Civil War, leading to the preservation of the Union and the abolition of slavery.

Antietam

The site of a decisive battle during the American Civil War in September 1862, known as the bloodiest single-day battle in American history.