Equity Method- Asset Side

CFA Level II FRA
#1

when a company (A) incests 30% in another company (B) for $10,000 should not the other asset account after the investment include the three following items:

  1. Beginning balance of other assets of acquirer company

  2. The $10,000 worth of investment

  3. The net income generated from company B minus dividends

#2 &3 represent the carrying value of the investment

#2

#1 won’t be included

#3 will only be included at end of period and is incomplete depending on depreciation if excess book value of ppe

#3

Why is #1 not included, is it because the amount I paid for the acquisition includes the company’s assets?

and what do you mean by "depending on depreciation if excess book value of ppe"