If a subsidiary is not consolidated, the parent can arbitrarily choose between either the equity method or the cost method.

Question

Quizplus · Accepted Answer

The choice between the equity method and the cost method for accounting for an investment in a subsidiary that is not consolidated is not arbitrary. It depends on the level of influence or control the parent has over the subsidiary, as well as accounting standards and regulations.

If a Subsidiary Is Not Consolidated, the Parent Can Arbitrarily