Consolidated Net Income Using the Equity Method for an Acquisition

Multiple Choice

Consolidated net income using the equity method for an acquisition combination is computed as follows:

A) Parent company's revenues from its own operations plus subsidiary retained earnings.
B) Parent's reported net income plus subsidiary dividends.
C) Combined revenues less combined expenses less equity in subsidiary's earnings less amortization of fair-value allocations in excess of book value.
D) Parent's revenues less expenses for its own operations plus the equity from subsidiary's earnings less subsidiary dividends.
E) None of these answer choices are correct.