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Explain the difference between consolidation and equity accounting.

Explain the difference between consolidation and equity accounting.

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Answer #1

In case of consolidation accounting, all assets and liabilities, income and gains are accrued as per the holding ratio in subsidiary company along with minority interest. In this method, full consolidation is done and minority interest is shown as liability.

In case of equity method of accounting, investment in other companies is revalued at balance sheet date and profit or loss on investment is transferred to profit and loss account.In this no full consolidation is done and no minority interest is shown.

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