COR2308. Accounting for Investments - Consolidation and Equity Method

Companies often make investments without buying an entire company. Companies may purchase a controlling interest or a non-controlling/significant interest in an investee. Depending on the facts and circumstances, companies may account for an investment as a controlled subsidiary (i.e., consolidation), an equity method investment or a financial instrument. This session focuses on the following methods of accounting for investments: * Consolidation (ASC 810) * Equity method (ASC 323) The session will also cover when it is appropriate to use proportionate consolidation.

Learning Objectives:

• Distinguish between the different methods for accounting for investments
• Determine the appropriate accounting when there are differences in a company’s influence over an investee’s operating and financial policies and activities: Control – consolidation (100% of investee’s results); Significant influence – equity method (ownership % of investee’s results); No control or significant influence
• Determine when and how to apply the different consolidation models: The Variable Interest Model and The Voting Interest Model
• Apply the following Variable Interest Model concepts: Identify when entity has a variable interest in another entity; Understand the characteristics of a variable interest entity (VIE); Understand and determine the primary beneficiary
• Determine when and how to apply the equity method of accounting and proportionate consolidation