Under the equity method, amortization of cost in excess of book value is recorded in the parent's general ledger.

Question

Quizplus · Accepted Answer

Under the equity method, the parent company records its investment in the subsidiary at cost. Any excess of cost over the subsidiary's book value is amortized over the life of the investment. This amortization is recorded in the parent's general ledger as a reduction to the investment account.

Under the Equity Method, Amortization of Cost in Excess of Book