sophisticated equity method.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter21: The Statement Of Cash Flows
Section: Chapter Questions
Problem 17GI
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Question
The method of accounting for subsidiaries that better reflects the investment account on parent-only financial statements is the
|
a. |
cost method. |
|
b. |
simple equity method. |
|
c. |
investment method. |
|
d. |
sophisticated equity method. |
Expert Solution
Step 1: Introduction
Subsidiary Account
A subsidiary account is a ledger account that is maintained within a subsidiary ledger and sums to a control account in the general ledger. For specific sorts of transactions, such as accounts receivable and accounts payable, a subsidiary account is utilized to track information at a very precise level. In an organized manner, subsidiary books keep track of transactions that are similar in nature. They are also called Daybooks or specialized journals.
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