This is not homework. It's a real life question. I am not an accountant but I am working as one for just a little while longer.
Suppose a parent accounts for their 100% owned sub using the equity method. The parent needs to account for their share of the sub's income. How does the sub account for this on their statement of cash flows? Thanks.
Sara
the sub does its own accounting independent of what the parent is doing.
Yes the sub does their own accounting, but the parent still recognizes the change in net equity of the sub.
The parent has a non cash activity - change in investment in sub. - which would be similar to unrealized gains/losses and would be presented in the operating activity section of the parent.
of course, there might be push down accounting.
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