CFAI EOC question- w/minority investments

target, only, equity, question, interest

In FSA, Page 73 # 26....under consolidation, why do you only add the minority interest to the acquirer's equity and not the total equity of the target ?
(read answer explanation on page 77, in calculating long term debt to equity)

does anyone know this?

tianxin

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2^#

发表于 2011-7-13 16:06 | 只看该作者

Because you already claimed all their assets and liabilities, so basically, you are saying that you own their entire company. However, that's not true, because there are others (the minority) who have some claim, thus they really now own part of the new company.

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kickthatcfa

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3^#

发表于 2011-7-13 16:06 | 只看该作者

got it, thanks dude.

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CFAI EOC question- w/minority investments

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