posted Mar 19, 2012, 8:29 AM by John Ye
No matter which method the Parent chooses to record the Sub’s activity, the consolidated totals end up the SAME!
This is because we are eliminating all the entries that we made during the year, regardless of the method used, and regardless of the amount!
Method
|
Investment Account
|
Income Account
|
Equity
|
Continually
adjusted to reflect
ownership of acquired company.
|
Income
accrued as earned; amortization and
other adjustments are recognized.
|
Initial
Value
|
Remains
at Initially-Recorded cost
|
Cash
received is recorded as Dividend Income
|
Partial
Equity
|
Adjusted
only for accrued income and dividends received from acquired company.
|
Income
accrued as earned; no other adjustments
recognized.
|
|
|
