When consolidated financial statements are prepared,the parent company uses the equity method and reports the subsidiaries as investment accounts on the balance sheet.

Question

Quizplus · Accepted Answer

When consolidated financial statements are prepared, the parent company eliminates the investment accounts of the subsidiaries and presents the subsidiaries' assets and liabilities on the balance sheet as if they were part of the parent company. The equity method is used by the parent company for the purpose of internal record-keeping and reporting, but it is not reflected in the consolidated financial statements.

When Consolidated Financial Statements Are Prepared,the Parent Company Uses the Equity