I’m still a bit confused.
Income statement = Equity Income for the period
Balance sheet entry = Beginning investment + Equity Income - % of Dividends paid
So do assets and equity change by the same amount? or they do not change?
Consolidation (less than 100%):
pick up 100% sales, expenses, assets, liability and what happen to NI and equity?
How do they compare to those under equity method?
And what are the effects on balance sheet if partial/full goodwill is used?
Stuck on the same points… Any expert who could throw some light on this please…
Income statement: Purely equity income * % owernship. This is similar to “interest” income, meaning it does not impact operating income but hits net income
Balance sheet: Carrying value + (NI - dividends)*% ownershit = asset value
No liabilities, straight pump to equity via the income statement
Income Statement: Record 100% of the units income statement as if it were the parent’s own. Only difference is minority interest credit is used in the income statement below operating income.
Balancesheet: Carry at 100% ownership as an asset, carry 100% ownership of liabilities, offset ownership % in equity to balance. This will be a positive number but is actually a reduction to equity. Said differently, equity holders do not have the rights to the assets of the % ownership in the consolidated entitiy, hence the seperate entry in equity.
In Equity Method,
the Assets and liablities do NOT change…
In consolidation,if consolidation is 80%
We add 100% of Sub Assets and Liabilities Incomes and Expenses to the holding companies BS but we show 20% as Minority Stake in Equity…
I hope i have made some contribution…