shareholder equity - CFAI EOC reading 21

its, why, accounting, investment, following

Can someone explain the following
Q3 Cinnamon’s shareholder’s equity on its balance sheet would most like be high
A. highest if Cinnamon is deemed to have control over Cambridge
B. independent of the accounting method used for the investment in Cambridge
C. highest if Cinnamon is deemed to have significant influence over Cambridge.
Answer is A - I thought the consolidation method has no impact on equity?
Related to Q5, why would shareholder’s equity will be higher under full goodwill?
Thanks. Someone might have asked the same question but the search function is not working

IAmNeil

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发表于 2013-4-1 13:05 | 只看该作者

A change in US GAAP for 2009 (SFAS 160) requires that Minority Interest on consolidated financial statements be reported as a component of equity.
this confusion is from a mistake in Schweser, check the errata

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random_walker47

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发表于 2013-4-1 13:05 | 只看该作者

priceless ro424!
can you explain why shareholder’s equity is higher under full goodwill?

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thommo77

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发表于 2013-4-1 13:05 | 只看该作者

Ok, but proportionate consolidation has no minority interest, so the equity is the same as the equity method?

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Analyze_This

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发表于 2013-4-1 13:05 | 只看该作者

I believe that’s correct.
I don’t have the question in front of me, but full goodwill is reported in minority interest, which is reported in equity, so equity is higher

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