If in the consolidation process the investment in subsidiary account is increased or decreased by the amount determined by the following calculation: the investment account is being converted from
A)cost to simple equity.
B)cost to sophisticated equity.
C)simple equity to sophisticated equity.
D)simple equity to cost.

Question

If in the consolidation process the investment in subsidiary account is increased or decreased by the amount determined by the following calculation:  the investment account is being converted from
A)cost to simple equity. 
B)cost to sophisticated equity. 
C)simple equity to sophisticated equity. 
D)simple equity to cost.

Quizplus · Accepted Answer

Rather than develop a separate set of procedures for elimination of an investment under the cost method, the cost method investment is converted to its simple equity balance at the beginning of the period to create date alignment.

If in the Consolidation Process the Investment in Subsidiary Account