Question

A company acquires a subsidiary and will prepare consolidated financial statements for external reporting purposes. For internal reporting purposes, the company has decided to apply the initial value method. Why might the company have made this decision?

Answer 1

Answer:

Is a relatively easy method to apply

Explanation:

Under the initial value method, when accounting for an investment in a subsidiary, The investment account remains at initial value. The investment account is adjusted to fair value at year-end. Dividends received by the subsidiary decrease the investment accoun