Equity method: The equity method basically keeps the record of the parent’s ownership interest in the net income of the subsidiary. Cost method: The cost method basically retains the original cost of acquisition balance in the subsidiary account. As the income is earned by the subsidiary, no adjustments would be made. To prepare : The amortization schedule for the years 2015 , 2016 , 2017 & 2018 .

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Chapter 3, Problem 9E

To determine

Equity method:

The equity method basically keeps the record of the parent’s ownership interest in the net income of the subsidiary.

Cost method:

The cost method basically retains the original cost of acquisition balance in the subsidiary account. As the income is earned by the subsidiary, no adjustments would be made.

To prepare:

The amortization schedule for the years 2015,2016,2017 & 2018 .

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