CFA book volume 2 reading 19 end o the chapter question 29.(page 166)
the answer says “under either of the consolidations, beginning equity is £1750 since it includes the £320 non controlling interest” what the fuck? How is there non controlling interest under proportionate consolidation? Am I reading the question wrong? Can someone open the book and take a look?
I don’t have the book w me…but I am assuming by “either consolidation”, they mean full or partial goodwill approach
it is a full goodwill or partial good will question.but under acquisition method, you include minority interest so your equity is higher, but under portionate consolidation, you don’t include minority interest, how is the equity higher?
it is a full goodwill or partial good will question.but under acquisition method, you include minority interest so your equity is higher, but under portionate consolidation, you don’t include minority interest, how is the equity higher?
it’s just bad writing… the answer is referring to consolidation with partial or full goodwill
If you use proportionate consolidation, you don’t own the whole (subsidiary) company. Somewhere you have to acknowledge that fact. You do it on the income statement when you show the minority interest in the net income of the subidiary, and you do in on the balance sheet when you show the minority interest in the equity of the subsidiary.
What’s odd about that?
The answer in the back is saying “under either of the consolidations, you add non controlling interest £320…” But we all know you don’t add non controlling interest for proportionate consolidation. That’s what’s puzzling me
Just debating with my girlfriend with this question, she’s studying CPA, she said “joint venture” shouldn’t be considered in this question, so proportionate consolidation isn’t an option. I guess the question didn’t say it’s a joint venture even it says first company aquires 50% of second company…