The consolidated financial statements of General Electric (GE) include the results of General Electric Capital Services (GECS)
Question:
The consolidated financial statements of General Electric (GE) include the results of General Electric Capital Services (GECS) , its 100%-owned financial services subsidiary.
Some investors think the business of a financial services subsidiary is so different from that of its parent that the two should not be consolidated. In 2011, GE reported consolidated net income of $14,443 million, and GECS reported net income of $6,637 million.
1. What would be the 2011 net income of GE if it did not consolidate GECS but accounted for it on an equity basis?
2. What would GE’s 2011 net income be if it did not own GECS but all other results were as reported? What percentage of GE’s net income comes from GECS?
3. What advantages does the consolidated statement have? What advantages does the unconsolidated statement that accounts for GECS on an equity basis have?
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta