CFAI EOC question- w/minority investments target, only, equity, question, interest

anshultongia

In FSA, Page 73 # 26....under consolidation, why do you only add the minority interest to the acquirer's equity and not the total equity of the target ?
(read answer explanation on page 77, in calculating long term debt to equity)

does anyone know this?

tianxin

Because you already claimed all their assets and liabilities, so basically, you are saying that you own their entire company. However, that's not true, because there are others (the minority) who have some claim, thus they really now own part of the new company.

kickthatcfa

got it, thanks dude.