BJordan85 wrote: Yes, the equity method is used for internal reporting purposes for ownership >50%. Then the "CAR IN BIG" entry is used at year end to consolidate.

Just one clarification.

A company has three choices of methods for internal reporting purposes:

Initial value-keep the investment account at its initial value; dividends are reported as income

Partial equity-same as equity without excess amortization of fair value over book value

Equity-investment account adjusted for income/loss of sub (including excess amortization of fair value over book value), dividends reduce account balance

On each B/S date, the company will have to make the relevant entries on the consolidation worksheet to convert the account to equity method before consolidation.

For consolidation, the book means the acutal consolidation process, not the percent of ownership.  Therefore, u can own 90 percent of stock and yet not consolidate.