Acquisition / Proportionate Consolidation / Pool of Interest

Hi guys,

Two dump questions to clarify some doubts.

  1. Anyone could explain the difference btw Acquisition method and Proportionate Consolidation method? I guess it is just a matter of wording, and proportionate consolidation would mean Equity method, correct ?

  2. When do we apply Pool of interest method?

Thanks a lot

  1. Acquisition method is when you include all the assets and liabilities of the acquiring company(B) on the balance sheet of main entity (acquirer, A) and showing a minority interest in the equity for proportion not being acquired.

  2. In Proportionate Consolidation, there is no minority interest and you only include assets and liabilities of B for the percentage acquired. Such as USD 50 Million of the total USD 100 Million current assets if the Company A is acquiring Company B’ 50%.

  3. Also called Uniting-of-interest method. The two firms financial statements are simply combined as if they were alwats one. No minority interest is noted. Both the Companies are treated as Equal, i.e. no Acquirer, acquired concept. Operating results of the prior years are presented as they were always one.

Does this help ?

2) The Pool of Interest (Uniting-of-interest) method, we would assume like if no acquistion whatsoever ever happened, since financial statments are restated as one and Assets and Liabilities are combined (with no goodwill recognized).

3) The Proportionate Consolidation method is similar to the Acquisition method except that Assets and Liabilities are combined pro-rata (to the original investment) and that it does not recognize any Minority Interest

Is that correct ?

Thanks a lot

yes it is … YAY!!

You’re awesome. Thanks and good luck for the exam

Hope you don’t mind me following up on this.

Can someone please explain what the difference is between Acquisition and Consolidation methods, if any. It seems like they are the same if someone can confirm.

Also when is the Equity/Acquisition/Proportionate consolidation methods used in a GAAP/IFRS context?


the difference between acquisition and consolidation is mentioned above.

Both IFRS and GAAP require Equity method under for joint ventures.

more than 50% investment and a controlling interest, use Acquisition methode…