Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 7

Sisk Company has owned 10 percent of Maust, Inc., for the past several years. This ownership did not allow Sisk to have significant influence over Maust. Recently, Sisk acquired an additional 30 percent of Maust and now will use the equity method. How will the investor report this change
A) A cumulative effect of an accounting change is shown in the current income statement.
B) No change is recorded; the equity method is used from the date of the new acquisition.
C) A retrospective adjustment is made to restate all prior years presented using the equity method.
D) Sisk has the option to choose the method to show this change.