Level of ownership-equity method

Reference no: EM13136823

If Coca-Cola acquires approximately 14% more of CCE, a majority of the stock will be held so that consolidation becomes a requirement. However, given the size of the present ownership and the dependence that CCE has on Coca-Cola for products and marketing, does Coca-Cola truly have no more than "the ability to exercise significant influence over the operating and financial policies" of CCE? Does the equity method fairly represent the relationship that exists? Or does Coca-Cola actually control CCE despite the level of ownership, and should consolation be required? Should the FASB reexamining the boundary between the application of the equity method and consolidation. Should the rules be rewritten so that Coca-Cola must consolidate CCE rather than use the equity method? If so, at what level of ownership would the equity method no longer be appropriate?

Reference no: EM13136823

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