Consolidated Financial Statements F09-21b

If using the equity method, what actions must the parent entity conduct?

Under the equity method, the parent must adjust on its books the carrying value of its investment in the subsidiary to reflect:

• The parent’s share of the subsidiary’s income or loss
• The parent’s share of dividends declared by the subsidiary
• The amortization of any difference between the FV of identifiable assets
• The entry reduces the income recognized from the subsidiary