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- 2014-6-29
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A question about intercorp Investment; it dosent seem consis
I have a question for number 26 in Intercorporate Investments. It asks for the long term debt to equity ratio for the equity method and the consoliation method.
For the consolidation method the book uses 1000/1750
The 1000 is the combined debt of the 2 comanies
The 1750 is the 1430(equity of Acquirer ex. Nina ) + 350 the noncontrolling interest.
In sch it say the non controlling interest amt should be .50 (amt not owned) * equity of acquired company (boswell), which in this case would be 580 =(535 com stock +45 RE)
and the noncontrolling interest would be .50 *580 =290
But instead of the 290, CFA uses 350 as the noncontrolling interest amt, which is the amt that the acquiring co (Ninmount) paid to buy and investment in the acquired co (boswell). |
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