Fifth, recognize a goodwill for the change in the assets value.
If a company owns between 20 percent and 50 percent of another company's stock, the company uses the equity method.
These two methods do not lead to consolidating the financial statements.
Mc Bride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.
The basic journal entry for the consolidation is to debit "Common Stock of the Subsidiary," "Additional Paid In Capital of the Subsidiary," "Retained Earnings of the Subsidiary," "Goodwill" and the adjustments to fair value on the company's balance sheet.