Consolidating equity investment
Then we need to recognize any non-controlling interest and goodwill.Mommy has owned 80% of Baby’s share and therefore, non-controlling interest owns .Assuming a fund manager is not required to consolidate the fund vehicle and is required to account for its investment under the equity method of accounting, the manager may still elect the fair value option under ASC 825 – Financial Instruments to allow them to apply the guidance of ASC 820.
It is still possible to utilize net asset value as a practical expedient to arriving at fair value of a partnership interest in a managed investment fund, however, there are several steps that must be considered beforehand to arrive at this conclusion.
I’ll do it on a case study, with explaining what I do and why.
If you don’t like reading, you can skip to the end of this article and watch my video.
If you’d like to revise a theory first, then please read my summary of IFRS 3 Business Combinations and IFRS 10 Consolidated Financial Statements, both of them contain video in the end.
Here’s the question: Mommy Corp has owned 80% shares of Baby Ltd since Baby’s incorporation.