Parental Co. is considering an acquisition of the net assets of Student Ltd. by obtaining control of greater than 50% of their common shares. 

a. What are the alternatives available to the management of Parental Co. to account for their Investment in Student Ltd? 

b. What is the balance in the Investment in Student Ltd. on the consolidated financial statements of Parental Co.? 

c. What can we determine about the consolidated retained earnings balance as compared to the retained earnings balance of Parental Co. in their non-consolidated financial statements assuming that Parental Co. accounts for their Investment in Student Ltd. using the equity method?

Answer rating: 100% (QA)

The ownership is more than 50 of voting another company means there should form a parentsubsidiary r... View the full answer