When you apply the equity method, how is the excess of any cost over book value

Question

When you apply the equity method, how is the excess of any cost over book value accounted for? YOU MUST EXPLAIN YOUR ANSWER IN THE SPACE PROVIDED.

A. The excess is allocated to the difference of fair value and book value multiplied by the percent of ownership of TOTAL ASSETS.

B. Under valued assets are identified and any additional payment is attributed to an intangible asset referred to as good will.

C. The excess is allocated to the difference of fair value and book value multiplied by the percent of ownership of CURRENT ASSETS.

D. You ignore it

E. All of the above are incorrect

Explanation / Answer

Option E ) all of the above are incorrect

The excess is allocated to the difference of fair value and book value multiplied by the percent of ownership of Net assets.

Option E ) all of the above are incorrect

The excess is allocated to the difference of fair value and book value multiplied by the percent of ownership of Net assets.

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