CH 2.docx - So you can see right here that we have fully...

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So you can see right here that we have fully accounted for the subsidiary using the equity method of accounting. We have equity income, which is composed of thenet income of the sub less any accumulated depreciation and amortization from the AAP. We have our equity investment account, which would have been all of theactivity of the subsidiary during the c urrent year. So if we look at the computation to yield pre-consolidation income from the su bsidiary reported by the parent,we're going to use that as our next illustration, and we're g oing to show the computation of the yield-- how do we get the $1,314,788 equity income ba lance atDecember 31? So in this exercise, we're going to go through the process of demonstrating how we arrived at these two numbers, which are shown, if I might skip back, in thisfinancial statement of $ 189,126 in equity income, and then $1,314,788. We're going to demonstrate exactly how w e got those numbers. So before the year end,we're going to prepare this particular spreads heet. You can see the income from the subsidiary was $216,930.
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  • Spring '14
  • Generally Accepted Accounting Principles

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