Consolidation

FAR loves to make you pick the right ownership tier: a percentage plus a fact pattern maps to a method. Below ~20% with no significant influence, use fair value through net income (ASC 321); 20–50% with significant influence triggers the equity method (ASC 323); more than 50% — or other control, like the unilateral ability to elect a majority of the board under the ASC 810 voting-interest model — forces consolidation (the >50% presumption is rebuttable only in narrow cases). The high-yield trap is noncontrolling interest (NCI): under the acquisition method you consolidate 100% of the subsidiary’s assets, liabilities, revenues, and expenses, then report NCI’s share of equity and net income separately within consolidated equity — not just the parent’s percentage.

The classic confusion is consolidation versus the equity method (a one-line “investment” account, not line-by-line addition) and goodwill: US GAAP requires the full-fair-value method, so goodwill includes NCI’s share (partial goodwill is an IFRS-only election). Memory hook: “control = combine, influence = one line.” Also eliminate unrealized intercompany profit in ending inventory and gains on intercompany fixed-asset sales, not just receivables and payables.