Under the initial value method, when accounting for an investment in a subsidiary,
A) Dividends received by the subsidiary decrease the investment account.
B) The investment account is adjusted to fair value at year-end.
C) Income reported by the subsidiary increases the investment account.
D) The investment account does not change from year to year.
E) Dividends received are ignored.

Question

Quizplus · Accepted Answer

Under the initial value method, the investment account remains at its original cost and does not change from year to year, regardless of the subsidiary's income or dividends.

Under the Initial Value Method, When Accounting for an Investment