标题: Under 50% Investment, Equity or Proport. Consol? [打印本页] 作者: Kingpin804 时间: 2013-4-22 05:32 标题: Under 50% Investment, Equity or Proport. Consol?
Simple question guys, although I can’t freaking remember.
If the company has signif. influence, but is under 50%, so not control and not a joint venture, under IFRS and GAAP I thought you use proportionate consolidation, but I just read it was equity.. Help!
Thanks.作者: needhelp1700 时间: 2013-4-22 05:33
Significant influence and less than 50%? Thats definitely equity.
Passive Investment (Typically under 20%) - Investment in Financial Assets
Significant Influence (Typically between 20 - 50) - Equity Method
Joint Control (Typically 50/50) - Proportionate Consolidation
Control (Typically above 50%) - Acquisition Method (Full Consolidation)
The ability to influence the investee is the primary determinant of how to account for the investment, not necesarily the percentage ownership.作者: leadcfa 时间: 2013-4-22 05:33
Thanks fellas作者: Nishant1 时间: 2013-4-22 05:33
Also proportionate consolidation is IFRS only (although they have proposed to revise it to converge with GAAP).
It does not have to be 50/50 ownership though - it might be an odd occurence for someone to have a 70% economic interest but share control (equally) with the 30% venturer. But this would be a typical CFAI curve ball type questyion. The requirement is joint control so in your original question, if one entity has control it cannot be proportionate consolidation.
