[lizbette]

Ran into this Becker F3 question, and I’m not sure if I fully understand.

Penn, Inc., a manufacturing company, owns 75% of the common stock of Sell, Inc., an investment company. Sell owns 60% of the common stock of Vane, Inc., an insurance company. In Penn’s consolidated financial statements, should consolidation accounting or equity method accounting be used for Sell and Vane?
a. Consolidation used for Sell and equity method used for Vane.
b. Equity method used for both Sell and Vane.
c. Equity method used for Sell and consolidation used for Vane.
d. Consolidation used for both Sell and Vane.

Becker says the correct answer is “D.” Does that mean the rules for consolidation under GAAP and IFRS are different? Because under IFRS, wouldn’t the answer be that Penn uses the consolidation method, but Sell and Vane both do not, since they are partially owned by Penn?

REG - PASSED!
FAR - failed. then PASSED!
AUD - PASSED!
BEC -

REG (8/11/16) -
FAR (TBD) -
AUD (TBD) -
BEC (TBD) -

[MINO21c]

I think you are misunderstanding the question. Penn has significant influence to both Sell and Vane, so Penn's consolidated financial statement will include both Sell and Vane under GAAP and IFRS.

BEC: 77 (7/12/2016)
REG: 84 (8/17/2016)
FAR: 86 (10/27/2016)
AUD: 74, 82 (11/10/2016)

BEC 7/12 - PASS
REG 8/17
AUD 9/8
FAR 10/15

[Author]

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