Enterprise & Equity ValueHard

Contrast the accounting and EV-bridge treatment of a 10%, a 30%, and a 70% stake in another company.

Model answer

10% (cost/fair-value method): not consolidated; dividends/fair-value changes only - it's a non-operating asset, so SUBTRACT its value from EV. 30% (equity method): one-line 'equity in earnings' below…

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