Hey guys I was wondering if you could help me out here as I really cant wrap my head around this. Under full consolidation, we are removing the equity income from the associate (which i understand because we are recognizing the revenues and expenses in full under full consolidation and and subtracting out the noncontrolling portion…and for proportionate we are already recognizing the proportionate share of revenues and expenses). However, I am a little confused as to why we are removing the equity of the associate from the consolidated balance sheets. Any help would be greatly appreciated. Thanks again!
With revenue/income on the income statement, it’s the same for a B/S isn’t it? You absorb all their assets and liabilities under full consolidation.
By including the full amount of assets and liabilities in consolidated BS and then deducting the minority interest in the equity section there is no need to add the affiliates equity balances to the parent, right???
> However, I am a little confused as to why we are removing the equity of the associate from the consolidated balance sheets. Any help would be greatly appreciated. Thanks again! You already paid for that somehow…if stock was issued, your capital stock and additional paid in capital are larger now, so you don’t need to consider the acquired company’s equity.