Hello. Does this seem right? Question - Based on Gelblum’s estimates, Zimt’s net income in 2011 will most likely be: a highest if zimt is deemed to have control of oxbow b highest if zimt is deemed to have significant influence over oxbow c independent of accounting method used for the investment in oxbow. background: ifrs is used my answer is a because that means the company is consolidated into the balance sheet. I said no to answer b because then partial consolidation is used. Answer c didn’t make sense because of the fact that entires are different based on different methods. The book says c is correct. Any help?
but this is not a B/S question, it’s NI.
True. Ok to restate when you consolidate you get all the net income into the sheet and when you do partial you will only get part of it. Would it not make sense for 100%>50%. consolidation basically means the two companies are one.
NI is the same under all investment accounting methods bro
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You’re not thinking about the additional depreciation expense and other expenses that result from owning 100% of the company versus 50%.
Yes you are correct. Income statement entry for minority interest brings it down. Gonna be the same. Oooookkkkk never mind.
Remember also that there is no MI if the subsidiary is 100% owned. MI only occurs if less than 100% of the company is owned.