Accountants Sometimes Refer to the Equity Method as a One-Line

question 98

Multiple Choice

Accountants sometimes refer to the equity method as a one-line consolidation because

• A)the revenues less the expenses of the subsidiary appear in the one account, Equity in Earnings of Subsidiary.
• B)the assets and liabilities of the subsidiary appear on one line, Investment in Subsidiary.
• C)the application of the equity method therefore rests on the guiding principle to treat the items in such a way that the parent's net income equals the same amount that it would report if it consolidated the investee firm instead of using the equity method.
• D)all of the above
• E)none of the above

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