[shamelesshamus]

In the Becker Far3 section, in the Acquisition Method Subsection, there is a question that gives you all the financial statements, etc and then asks “In the December 31, Year 1 consolidated financial statements of Purl and its subsidiary, net income should be…”

The answer is $210,000 which is the Parent company’s net income. It says “Consolidated net income is the same as the parent company net income, when the equity method is used”

So my question is, how do you know that the equity method was used there? Given that the problem is in the Acquisition method section, it threw me a bit of a curve ball.

BEC- 92
FAR- 93
AUD-
REG-

[Anonymous]

I am not sure why the Equity method is relevant here. The question states that Scott company is a wholly owned subsidiary of Purl company. In that case, the subsidiary accounts (Common Stock, RE (including Income) and APIC are eliminated). I am not sure if I am 100% right. Can someone else chime in?

[Anonymous]

I am not sure why the Equity method is relevant here. The question states that Scott company is a wholly owned subsidiary of Purl company. In that case, the subsidiary accounts (Common Stock, RE (including Income) and APIC are eliminated). I am not sure if I am 100% right. Can someone else chime in?

[Author]

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