CFAI L2 2011 Mock Afternoon Q37 Why consolidation method?

2011, companies, company, instead

So the company is owned by 3 companies, which in my understanding should be a joint venture. Shall we use proportionate instead of consolidation method?

. FRA Inventory Write down question

. CFA 2011 Mock - Derivatives AM session

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发表于 2013-4-22 06:22 | 只看该作者

btw, what does consolidation method mean? It seems to be acquisition method according to the answer

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hardwork24

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发表于 2013-4-22 06:23 | 只看该作者

no, in a joint venture you have JOINT CONTROL
consolidation = acquisition method.
since Cupercino has CONTROL, not JOINT CONTROL , you use Ac. Method.
the other are equity since they do not have joint control or control. anyway since it’s a US GAAP probleme even if they had JOINT control they would have been consolidated with Equity method

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towardsutopia21

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发表于 2013-4-22 06:23 | 只看该作者

I see. thanks!!

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tarunajwani

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发表于 2013-4-22 06:24 | 只看该作者

Joint control is usually a 50%/50% split between 2 companies. However, this control could be shared equally 1/3 between 3 investors, 1/4 between 4 investors etc

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amqata