Equity, Aquisition method and shareholders equity increase, equity, interest, method, change

amqata

Schweser states that shareholders equity does not change, regardless of what method is used.
However, using the acquisition method, equity must increase as a minority interest is added to it.
This doesn’t make sense?

bigredhockey55

No, that is wrong. GAAP (SFAS 160) and IFRS report both report as a separate component of stockholder’s equity (CFAI p153). I think schweser is wrong.

hassan

Equity will only increase IF minority interest is added to equity. U.S. GAAP says that minority is mezzanine financing so not added to equity. Don’t let it bother you though. Just remember that under all methods, equity is the same ;)