When the parent uses the cost method, eliminating entry (A) adjusts the parent's balance sheet accounts to the amounts reported using the complete equity method. Which of the parent's accounts must be adjusted?

Question

Quizplus · Accepted Answer

The correct answer is D because when adjusting from the cost method to the complete equity method, adjustments typically involve the investment in subsidiary account to reflect the parent's share of the subsidiary's earnings or losses, and adjustments to retained earnings and accumulated other comprehensive income to reflect the parent's share of these items as reported by the subsidiary. Identifiable intangibles and goodwill are not adjusted in this process as they are recognized at the time of acquisition and not affected by the equity method adjustments.

When the Parent Uses the Cost Method, Eliminating Entry (A)