AA 4 Answer

AA 4 Answer - The amortization expense has to be eliminated...

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When a parent company uses the equity method to account for investment in a subsidiary, the amortization expense entry recorded during the year is eliminated on a consolidation worksheet as a component of entry I. what is the necessity of removing this amortization?
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Unformatted text preview: The amortization expense has to be eliminated to maintain the fair book value of the investments in the accounts. The amortized value does not show the actual transfer price and may distort the financial statements....
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