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Module V· Consolidation Methods & Equity MethodBasic
Question

What are the four methods to account for an investment in consolidated financial statements?

Answer
Four broad methods
  1. Full consolidation: control; consolidate 100%.
  2. Equity method: significant influence or joint venture; one-line investment and share of profit.
  3. Proportionate recognition / joint operation accounting: recognize share of assets, liabilities, revenue, and expenses.
  4. Financial investment accounting: no control or significant influence; usually IFRS 9 fair value or amortized cost classification.
IB point

Method choice changes EBITDA, revenue, net debt, and EV bridge mechanics.

Next →When do you apply the equity method, and where does the investment appear in the three statements?
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