Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )

(Hop HipldF0AV) #1

33 With majorityholdings, this willhappen indirectly.Full
consolidationwillinitiallycount 100 percentoftheearnings
ofthesubsidiary in theparentcompany’searningsbut the
portion of these earnings that are attributable to minority
stockholdersinthesubsidiarywillbesubtractedtoarriveat
the net income of the parent company.


34 Theequitymethodandfullconsolidationaresimilartothe
approaches used with cross holdings. In proportional
consolidation,thefirmsinvolvedinthejointventurehaveto
consolidate the proportion of the joint venture revenues,
operatingexpenses,andoperationincomethatisattributable
to them. In the balance sheet,they have to report on the
proportion of the joint venture assets and liabilities that
belong to them.

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