Under the initial value method, when accounting for an investment in a subsidiary,
A) Dividends received by the subsidiary decrease the investment account.
B) The investment account is adjusted to fair value at year-end.
C) Income reported by the subsidiary increases the investment account.
D) The investment account remains at initial value.
E) Dividends received are ignored.

Question

Quizplus · Accepted Answer

Under the initial value method, the investment account remains at initial value and is not adjusted for any changes in the subsidiary's income or dividends received.

Under the Initial Value Method, When Accounting for an Investment