Consolidation in CFAI EOC Reading 18

CFA Level II FRA
#1

Referring to Question 29 and 30 in CFAI EOC Reading 18. What does it mean by “consolidation” here? In Q29, I get it that it means acquisition method because full goodwill and partial goodwill are concepts under it. But in Q30? Does it say anywhere in the notes / books that consolidation of 2 companies will have to use acquisition method?

Thanks!

#2

Consolidation means using the acquisition method: combining (consolidating) the subsidiary’s assets, liabilities, revenues, and expenses with the parent’s.

#3

Thanks. That’s all I need to know. I thought usually we use Acquisition method. equity method and proportional acquisition (which is a kind of consolidation too!), so it’s a bit confusing when I saw the word “consolidation”.

#4

You’re quite welcome.