In preparing consolidated working papers, beginning retained earnings of the parent company will be adjusted in years subsequent to acquisition with an elimination entry whenever:

a. a noncontrolling interest exists.

b. it does not reflect the equity method.

c. the cost method has been used only.

d. the complete equity method is in use.

Question

Business

Marlie Lewis

17 April, 07:36

In preparing consolidated working papers, beginning retained earnings of the parent company will be adjusted in years subsequent to acquisition with an elimination entry whenever:

a. a noncontrolling interest exists.

b. it does not reflect the equity method.

c. the cost method has been used only.

d. the complete equity method is in use.

+4

Answers (1)

Know the Answer?

Matthew Jennings · Answer 1

b. it does not reflect the equity method.

Explanation:

If the beginning retained earnings do not match with the equity method we must adjusted. If we do not; then after including the other transactions which are based on equity method will lead to a mistaken ending retained earnings and thus; the consolidated balance sheet will not match Assets with liabilities plus stockolders equity.