Chapter 3, Problem 22P

a.

To determine

Find the December 31, 2018, Investment Income and Investment in Company C account balances assuming Company A uses the:

• Equity method.
• Initial value method

b.

To determine

Explain the manner in which the parent’s internal investment accounting method choice affect the amount reported for expenses in its December 31, 2018, consolidated income statement.

c.

To determine

Explain the manner in which the parent’s internal investment accounting method choice affect the amount reported for equipment in its December 31, 2018, consolidated balance sheet

d.

To determine

Find Company A’s January 1, 2018, Retained Earnings account balance assuming Company A’s accounts for its investment in Company C using the:

• Equity value method.
• Initial value method

e.

To determine

Identify the worksheet adjustment to Company A’s January 1, 2018, Retained Earnings account balance is required if Company A accounts for its investment in Company C using the initial value method.

f.

To determine

Prepare the worksheet entry to eliminate Company C’s stockholders’ equity.

g.

To determine

Find the consolidated net income for 2018.