When a parent uses the equity method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet?

Parent company net income equals controlling interest in consolidated net income.

Parent company retained earnings equals consolidated retained earnings.

Parent company total assets equals consolidated total assets.

Parent company dividends equals consolidated dividends.

Goodwill will not be recorded on the parent's books.

I know the answer is the 3rd option but why ?

Question

21-02-2020
Business

contestada

When a parent uses the equity method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet?

Parent company net income equals controlling interest in consolidated net income.

Parent company retained earnings equals consolidated retained earnings.

Parent company total assets equals consolidated total assets.

Parent company dividends equals consolidated dividends.

Goodwill will not be recorded on the parent's books.

I know the answer is the 3rd option but why ?

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Answer:

When a parent uses the equity method throughout the year to account for its investment in an acquired subsidiary, the following statements is false before making adjustments on the consolidated worksheet:

Parent company total assets equals consolidated total assets.

Explanation:

Because total assets includes to the total amount of assets owned by a person, people or a business recorded in the accounting records and shown in its balance sheet, and consolidated assets are all assets owned directly or indirectly by the business and also reflected on the Company's consolidated balance sheet prepared in accordance with GAAP, they do not refer to income, earnings, dividends or goodwill.