Which of the following adjustments (if any) to Retained Earnings is necessary for the preparation of the Consolidated Balance Sheet?
A) Under both the Cost and Equity methods, the parent must record its share of its
Subsidiary's income.
B) Under both the Cost and Equity methods, the parent must record its share of its
Subsidiary's income less any dividends received from the subsidiary.
C) No adjustment is required under either the Cost or the Equity methods.
D) No adjustment is required if the parent has been using the Equity Method.

Question

Quizplus · Accepted Answer

Under the Equity Method, the parent company already records its share of the subsidiary's income and adjusts for dividends received, so no further adjustment to Retained Earnings is necessary for consolidation.

Which of the Following Adjustments (If Any) to Retained Earnings