Abstract:
In our workpaper format, we carry the controlling share of net income line down to the Retained
Earnings Statement section of the worksheet without adjustment. We similarly carry the ending
retained earnings row down to the Balance Sheet section, again without adjustments or eliminations.
Notice too that each row in the workpaper generates the consolidated amounts by adding together
the parent and subsidiary account balances and then adding or subtracting the adjustments and
eliminations as appropriate.
Description:
The difference between income from a subsidiary recognized on the books of the parent and dividends
received represents the change in the investment account for the period. The $12,800 credit
to the Investment in Son account reduces that account to its $176,000 beginning-of-the-period balance
and establishes reciprocity between the investment
