Choosing the Post-M&A Consolidation Method

posted Mar 19, 2012, 8:29 AM by John Ye
No matter which method the Parent chooses to record the Sub’s activity, the consolidated totals end up the SAME!

This is because we are eliminating all the entries that we made during the year, regardless of the method used, and regardless of the amount!


Investment Account

Income Account


Continually adjusted to reflect ownership of acquired company.

Income accrued as earned;  amortization and other adjustments are recognized.

Initial Value

Remains at Initially-Recorded cost

Cash received is recorded as Dividend Income

Partial Equity

Adjusted only for accrued income and dividends received from acquired company.

Income accrued as earned;  no other adjustments recognized.