Morning Mock Exam Q35 and Q36 equity, earned, interest, part

hanvinh

For Q35, is the term “time interest earned” used in the CFAI text?
For Q36, the explanation mentions that minority interest is part of the equity section (for US GAAP). Do we need to make this assumption for the exam?
Thanks.

NakedPuts00

There is no assumption here. It is something we should all know. The problem states that their is a 50% stake not owned by the subject company. This implies that there is minority interest when we use the consolidation method.

Colum

I know that there is a minority interest. However, according to US GAAP, minority interest is part of the mezzanine section (or at least it was the case in the past). My point is that, do we need to follow the new rule even if it was changed after the CFAI text was written?

onelife1

Yea if they prepare consolidated statements, they ask you to do it assuming they consolidate it, so don’t use equity method is what they are saying. Thus it is the 1300 equity of Merick + the Non controlling interest which is the Fair value $1000*.5= Noncontrolling interest, total equity would be 1300+500=1800$