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Equity Method for Investments

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Quest 1 - Page W90


1. Given the relationship between Coke and Enterprises, discuss the appropriateness of Coke's use of the equity method to account for it investment in Enterprises.

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Solution Summary

The solution explains when it is appropriate to use the equity method using the example of Coca Cola. The posting only answers question 1 and not other questions

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The question is basically whether Coca Cola should consolidate the results of the bottlers or should use the equity method for reporting. As per FASB statement No. 94 only majority owned companies should be consolidated. Coca Cola holds less than 51% and hence need not consolidate. As far as appropriateness is ...

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