FSA: cfa mock exam: suburban publisher case: total shareholder's equity total, statements, suburban, only, equity

bcp901

when asked about total shareholdre's equity in suburban's consolidated financial statements:
why only consolidate the stock , not retained earning from HiQ Printers? Thanks.

sameeragarwal

good question, I was thinking the same exact thing.

It is just a very random thing to leave out, anyone have any ideas?

needhelp1700

well, he is using the market value of total sh. holders equity of the child company...

he has exchanged shares of own company for the controlling interest & the non controlling interest .. in combination of these two he has reported for everything ..

so the addition to the parents B/S is

Controlling Interest - Shares issued*% owned
NonControlling Interest - %of Assets as identified using the value of shares issued (As calc in the answer section of the mock).

Hope this helps.



Edited 1 time(s). Last edit at Saturday, May 28, 2011 at 11:30PM by thedarkknight88.

xilinx_altera

Basically the retained earnings of the child company is accounted into the market value of its equity prior to acquisition .. so when we use it to value the company in out balance sheet, we have effectively already accounted for the childs ret earnings and hence need not add it back again !!