If a parent company uses the equity method of accounting for a partially owned subsidiary and there are no intercompany profits (gains) or losses eliminated for the measurement of consolidated net income, consolidated retained earnings is equal to the balance of the parent company's:

Question

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When a parent company uses the equity method, consolidated retained earnings include the parent's retained earnings plus the parent's share of the net increase in the subsidiary's retained earnings since the date of acquisition. This reflects the parent's share of earnings less any dividends received from the subsidiary.

If a Parent Company Uses the Equity Method of Accounting