Hi,
reading 16. is very confusing. I am not sure, if I had understood everything well. I prepared a table, which compares equity method, proportionate consolidation method, acquisition method and methods used in the current standards: held-to-maturity, held-for-trading, available-for-sale.
I am not sure whether it is correct. Do you see any mistakes here?
Is the rest of shareholder’s of equity (apart of net income) unaffected by held-to-maturity, held-for-trading and equity method? Am I right here?
I post it also, because maybe someone else will find it useful. If there is a mistake I will post corrected version.
The best way to find out is to run your notes through practice questions and test their validity. Adjust your notes accordingly if answers show another meaning.
Hi,
I believe there is a mistake in the table, in the proportionate consolidation you take your share only from the revenue, expenses, asset, and liabilities. you don’t make any changes to the equity… on a high level, the Net income and equity will be the same for both entity reporting under equity method and the proportionate consolidation. but the asset and liability will be different. as you use the net of asset and liability when you take your share in the equity method.