Hi all, hope everyone’s studying going as well as it can.

How do we know whether to include minority interest in calculating book value (and BVPS)? On page 436 of the CFA Equity textbook (reading 31), the BB example takes TD’s total equity and only subtracts the book value of preferred shares, leaving in the non-controlling interest in subsidiaries.

However, in one of the TTs (Byran Lee Case Scenario), we’re given the following:

  • Common shareholders’ equity 2,119.41
  • Non-controlling interest 580
  • Total equity 2,699.41

and asked to use residual income to value the company. The solution uses the 2,119.41 number for book value in the residual income calculation. This seems to conflict with the BB example from reading 31. Does anyone have any insight?

As always, thank you for your time.