When asset held by the subsidiary are with differential, both the equity method income and consolidated net income is affected as the proportion of differential is included in parents books as part of the investment in the subsidiary. When the asset is sold it must be written off by the parent in consolidation. The investment income or loss reported by P for its investment in S using equity method for 20X2.

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Chapter 5, Problem 5.24P

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Introduction: When asset held by the subsidiary are with differential, both the equity method income and consolidated net income is affected as the proportion of differential is included in parents books as part of the investment in the subsidiary. When the asset is sold it must be written off by the parent in consolidation.

The investment income or loss reported by P for its investment in S using equity method for 20X2.

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