_____ For 2006, a 100%-owned subsidiary reported (a) net income of $75,000 and (b) dividends declared of $15,000 ($10,000 of which was paid in 2006). What amount appears in the parent's separate income statement for 2006 under the equity method of accounting?

Question

Quizplus · Accepted Answer

Under the equity method of accounting, the parent company reports its share of the subsidiary's net income, not the dividends received. Since the subsidiary is 100% owned, the parent includes the entire $75,000 of net income in its income statement.

_____ for 2006, a 100%-Owned Subsidiary Reported (A) Net Income