Equity Investments are sometimes referred to as ""one-line consolidations."" That means that the balance sheets of the investor and investee companies are combined and that the Stockholders' Equity of the investor company is equal to that which would be obtained had the investor and the investee's balance sheets been combined.

Question

Nero

Business

13 June, 01:18

Equity Investments are sometimes referred to as ""one-line consolidations."" That means that the balance sheets of the investor and investee companies are combined and that the Stockholders' Equity of the investor company is equal to that which would be obtained had the investor and the investee's balance sheets been combined.

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Karma Guerra · Answer 1

False

Explanation:

One-line consolidation does not mean that the balance sheets of the investor and investee companies are combined, rather it means that the only entry that has to be passed in the books of the investor is a single line in the income statement which is 'share of associates profit' and a single line in the balance sheet which is 'investment' which represents the owned portion of the subsidiary's net assets

In one-line consolidation the Stockholders' Equity of the investor company is NOT equal to that which would be obtained had the investor and the investee's balance sheets been combined, because it reflects only the Stockholders' Equity of the investor company.