Has any one noticed that schweser says all 3 methods (equity, consolidation and proportionate consolidation) should all yield the same equity value. However if you look at pg66 of the “Financial reporting and Analysis” CFA Book, and do question 3 as well as q29 on pg74, the answer to q3 goes on to say: “Cinnamon’s shareholders equity on its balance sheet would most likely be highest if deemed to have control of Cambridge” … Basically implying that because the consolidation method shareholders equity includes non-controlling interest (which is treated as equity), it yields the highest equity value… Can anyone add to this??? Cheers
It does, and they’ve released an errata. Consolidated has the highest equity because the CFA texts consider MI as part of equity. Schweser screwed up on this. Proportionate has the same equity as the equity method because it doesn’t consider MI.
Thanks very much for that Banj! Much appreciated! Good luck Jesse
Its very important to look online at the errata…there’s also a ton of stuff not on it. Its unbelievable how much stuff they f’ed up on. Seriously, use some of the $750 I paid and get a damn editor.