Assume that a parent owns 60% of a sub, and has control. Under GAAP, the consolidation includes 100% of the subsidiary’s assets, liabilities, revenues, and expenses in the consolidated financial statements, and shows some noncontrolling interest in equity. An alternative way of accounting for this, which is NOT GAAP, and which the FASB rejected, would have been “proportional consolidation”, and to include in consolidation only the 60% of the sub’s assets, liabilities, revenues, and expenses in the financial statements which are owned by the parent company’s shareholders. Can you see any advantages, or disadvantages, to the method the FASB accepted, compared to proportional consolidation

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Comparing the FASB accepted method to proportional consolidation here are some of the advantages A g... View the full answer