00:01
Hello students, here is a question.
00:02
Under the cost method, there are the four scenarios given here.
00:05
We have to choose which is correct and which is false.
00:09
So, the first one says that the parent record, the parent record is prorata shares of the subsidiary, subsidiary post -acquisition income as increased to the investment, as increased to the investment account with the share of dividends.
00:49
Account with the share of dividends declared by subsidiary, declared by subsidiary.
01:06
So, this statement is true under the cost method and the second statement says that the parent investment in the subsidiary is recorded at cost, recorded at cost and never changed thereafter and never changed thereafter.
01:39
So, this statement, this statement is false under the cost method as the investment account is adjusted for the parent's share of subsidiary income or dividend and our third statement says that the parent records, the parent records its prorata share of the subsidiary, subsidiaries cumulative earnings as an increase to, as an increase to the investment, investment account and reduces the investment account with its share in dividend, share in the dividend declared by the subsidiary, declared by subsidiary...