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Basic Question 2 of 6
Under both the equity method and the proportionate consolidation method:
II. The total net assets are identical.
III. The total assets and liabilities are identical.
IV. The ratio analysis can be different.
I. The total sales and expenses are identical.
II. The total net assets are identical.
III. The total assets and liabilities are identical.
IV. The ratio analysis can be different.
User Contributed Comments 4
| User | Comment |
|---|---|
| Clint | Is this question right? II appears wrong. |
| pranit | II is correct. Total net assets is shareholder's equity, which is identical under both methods. |
| actiger | Net assets = total assets - liability? |
| aravinda | Total net assets is also know as "net worth, share holder's equity OR owner's equity"... Total net worth = Total assets - total liability It is usually comprised of "capital stock + retained earnings"...in either methods (equity or proportionate consolidation), the net worth is same. |
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Learning Outcome Statements
describe the classification, measurement, and disclosure under International Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments in associates, 3) joint ventures, 4) business combinations, and 5) special purpose and variable interest entities;
distinguish between IFRS and US GAAP in their classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;
analyze how different methods used to account for intercorporate investments affect financial statements and ratios.
CFA® 2025 Level II Curriculum, Volume 2, Module 10.