ADMN 4303H Chapter Notes - Chapter 4: Financial Statement, Discounted Cash Flow, Business Valuation
30 Mar 2020
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Document Summary
Four theories propose a solution to preparing consolidated financial statements for non-wholly subsidiaries: proportionate consolidation method, parent company method. The following table indicates the current status and effective usage dates for these four methods: However, it is used to report certain types of joint arrangements. Similar to the proportionate consolidation method the parent company method focuses on the parent company but gives some recognition to nci. Since the parent company method is no longer used in practice, it will not be illustrated in this textbook. Sometimes, it is appropriate to measure nci using the price per share paid by the parent to obtain control subsidiary: nci could be valued using business valuation techniques, but this is a costly exercise. In this text, we will assume a linear relationship to calculate the value of nci except when we are given the market price of the subsidiary"s shares help by the non-controlling shareholders.
