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Assume that the Investor has a controlling interest in the Investee. Which of the following are...

Assume that the Investor has a controlling interest in the Investee. Which of the following are true statements about the relationship between the equity method and consolidation?

a. Under the Equity Method, the investor's net income will be the same as consolidated income.

b. Under the Equity Method, the investor's net income will be smaller than consolidated income.

c. Under the Equity Method, the investor's retained earnings will be smaller than consolidated retained earnings.

d. Under the Equity Method, the investor's retained earnings will be equal to consolidated retained earnings.

e. None of the Above

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Answer #1
Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!
Assume that the Investor has a controlling interest in the Investee. Which of the following are true statements about the relationship between the equity method and consolidation?
Answer is option d.
d. Under the Equity Method, the investor's retained earnings will be equal to consolidated retained earnings.
Because the investee's share capital and retained earnings is set off with the investment of investor company in the investee company. So retained earnings of investor company will same as consolidated retained earnings.
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