How Does the Partial Equity Method Differ from the Equity

question 24

Multiple Choice

How does the partial equity method differ from the equity method?

• A) In the total assets reported on the consolidated balance sheet.
• B) In the treatment of dividends.
• C) In the total liabilities reported on the consolidated balance sheet.
• D) Under the partial equity method, subsidiary income does not increase the balance in the parent's investment account.
• E) Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary.

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Definitions:

Amortize

To amortize means to gradually reduce or write off the cost or value of an asset or a debt over a period.

Fair Value

The estimated market value of an asset or liability, reflecting the amount for which it could be exchanged in an orderly transaction between market participants.

Net Assets

Net Assets represent the total assets of a company minus its total liabilities, showing the company's financial health and equity value.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset over its history, reducing its book value.