contestada

When a company applies the initial value method in accounting for its investment in a subsidiary and the subsidiary reports income less than dividends paid, what entry would be made for a consolidation worksheet?



Picture

C above

B above

A above

E above

D above

Respuesta :

jepessoa

Answer:

A) Dr. Retained earnings Cr. Investment in subsidiary

Explanation:

Retained earnings is an equity account (credit balance) and since it must decrease due to the fact that the amount of distributed dividends is larger than the subsidiary's profits, it must be debited.

Investment in subsidiary is an asset account (debit balance) and since it must decrease for the same reason as above, it must be credited.

Otras preguntas