Under the Equity Method, which of the following statements is TRUE?
A) The parent records its pro rata share of the subsidiary's cumulative earnings as an
increase to the investment account and reduces the investment account with its
share of the dividends declared by the subsidiary.
B) The parent's investment in the subsidiary is recorded at cost, and only changed
thereafter if there has been a permanent impairment in the value of the investment.
C) The parent's investment in the subsidiary is recorded at cost and reduced by any
excess dividends received from the subsidiary.
D) The parent records its pro rata share of the subsidiary's post-acquisition income as
an increase to the investment account and reduces the investment account with its
share of the dividends declared by the subsidiary.
D) The parent records its pro rata share of the subsidiary's post-acquisition income as
an increase to the investment account and reduces the investment account with its
share of the dividends declared by the subsidiary.
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