Any relationship between the purchase method and consolidation method? Can I use equity method within purchase method? I’m very unsure about accounting stuff, even if I may get the questions right.
They account for two different things. Equity method is used for intercorporate investments. Purchase method is used for acquistions.
Got it. purchase method is for the acquisition (or business combination). Equity and consolidation methods are for the investments. It seems to me that the purchase method is one time thing. After the acquisition is completed, the usually accounting methods apply(purchased asset’s market value becomes the asset’s book value), right? I messed up with those methods(the consolidation method actually uses the target’s book values).
Can tell me what is “acquisition method” mentioned in CFA curriculum?
acquisition method is a new name for purchase method.