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Hi Sir,
I am confused with consolidation accounts. Can you please clarify the following question for me?
1. Why are associated companies accounted for under the equity method rather than consolidation?
2. Why goodwill is calculated at the date of acquisition while NCI is calculated at the year-end?
3. why pre-acquisition profits of a subsidiary are treated differently from post-acquisition profit?
Thank you very much
Trang“1. Why are associated companies accounted for under the equity method rather than consolidation?” – because that’s the way we are told to do it
“2. Why goodwill is calculated at the date of acquisition while NCI is calculated at the year-end?” – because goodwill is calculated at a point in time and then changes only as a result of being subjected to annual impairment review whereas nci is an ongoing provider of funds in the form of part-ownership of the entity
“3. why pre-acquisition profits of a subsidiary are treated differently from post-acquisition profit?” – because the parent company had nothing to do with the gathering pf pre-acquisition profits and we’re trying to show the results of the group whilst under the parent’s control
Maybe be a good idea to look at the F3 course notes and lectures on consolidations
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