Under the sophisticated equity method of accounting the pare

Under the sophisticated equity method of accounting, the parent reduces their recorded Subsidiary Income account for the amortization and depreciation of differences between the current fair value and carrying amount of a purchased subsidiary’s identifiable net assets on the date of the business combination.

True

False

Solution

Answer

False

Under the sophisticated equity method of accounting Amortization of the excess of fair value allocations over book value is ignored in regard to the investment account.