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January 20, 2023

A parent company may use on its books one of several methods of accounting for its ownership of a subsidiary: (a) cost method, (b) modified cost method, or (c) fully adjusted equit

A parent company may use on its books one of several methods of accounting for its ownership of a subsidiary: (a) cost method, (b) modified cost method, or (c) fully adjusted equity method. How will the choice of method affect the reported balance in the investment account when there are unrealized intercompany profits on the parent’s books at the end of the period?

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