Book value method


 

The book value method describes a method of capital consolidation in the context of a group financial statement. In this method, first the participation of the holding company in the subsidiary is calculated as a proportion of their equity. The amount of any difference which may result will be divided into quiescent reserves and charges. A remainder will be capitalised (as an asset or liability) as the company value (goodwill) or listed on the liabilities side of the balance sheet (alternative: revaluation method).

 

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