CFA CFA Level 2 Level 2 Reading 19: Intercorporate Investments

Level 2 Reading 19: Intercorporate Investments

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  • MockTurtle
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    When I first read this chapter it seemed straightforward, but now I’m doing problems and it’s extremely confusing! Does anyone have handy points about the salient features of controlling interest, significant influence, equity method of accounting, proportionate consolidation, pooing of interests, full goodwill, partial goodwill?

    Sophie Macon
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    Hi @shantala, what aspect in particular? Is there any question that created the confusion? Trying to narrow down the broad question here 🙂

    MockTurtle
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    Hi @sophie, I’m trying to sort out which items are included at what percentage for these different methods, and where they are included. I think I’ll go through the chapter and try to make a table or something.

    Sophie Macon
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    Ah, give me (or @zee or @christine) 10 min. I’m trying to figure out how to make tables too :”> “

    christine
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    Hey @shantala, let me know if this table helps:

    Ownership Degree of Influence / Control US GAAP Method IFRS Method
    Less than 20% No significant influence Depends on security classification Same as US GAAP
    20% – 50% Significant influence Equity method Same as US GAAP
    Each party owns 50% Shared control Equity method Chocie of equity method or proportionate consolidation
    More than 50% Control Acquisition Same as US GAAP
    MockTurtle
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    Thank you so much @christine!

    Sarah
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    @Sophie did you guys have a competition on who could make a table first :p

    Sophie Macon
    Keymaster
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    Just a little @diya. I blame using 8 fingers to type instead of full 10. My pinkies have zero strength. =))

    Zee Tan
    Keymaster
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    Obviously I lost. Shouldn’t have taught how to use tablizer to @christine

    Sarah
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    Interesting fact @Sophie but your pinky is not your weakest finger. What is your typing speed? I’m curious…

    Sophie Macon
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    Slow as a tortoise. I ain’t no Gen-X speed typer, I’m ancient remember? 😛

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