On January 1, 2009, Eagle Company purchased 15% of the voting common stock of Frank Corp. On January 1, 2011, Eagle purchased 28% of Frank's voting common stock. If Eagle achieves significant influence with this new investment, how must Eagle account for the change to the equity method?
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A.
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It must use the equity method for 2011 but should make no changes in its financial statements for 2010 and 2009
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B.
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It should prepare consolidated financial statements for 2011
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C.
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It must restate the financial statements for 2010 and 2009 as if the equity method had been used for those two years.
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D.
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It should record a prior period adjustment at the beginning of 2011 but should not restate the financial statements for 2010 and 2009.
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E.
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It must restate the financial statements for 2010 as if the equity method had been used then.
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