Equity method accounting and intercompany transactions.

In their consolidated statements chapters, most advanced accounting texts include a presentation of the "full" or "complete" equity method from the standpoint of the parent company. Under this method, the parent company adjusts its accounts for intercompany transactions with the subsidiary,

in addition to accounting for its share of the subsidiary's net income and dividends (the "simple" equity method) and for differences between the price paid and its share of the underlying book value of the subsidiary (the "partial" equity method). In these texts, many entries made by the parent company to adjust its accounts for unrealized profits on intercompany transactions would require modification if the parent issued "parent only" statements, or if the subsidiary was not consolidated (or an investor/investee relationship instead of a parent/subsidiary relationship existed).

The purpose of this paper is to discuss and illustrate parent/investor accounting for these intercompany transactions when the parent/investor uses the full equity method, but does not consolidate. Although the advanced texts provide the correct consolidating working paper techniques and resulting consolidated statements, the parent company's need to issue "parent only" statements (a one-line consolidation) makes these issues important. This paper's modified approach is also important regarding an investor/investee relationship in which the investor has significant influence, but not control, over the investee. The paper could be useful for students in advanced accounting courses or in intermediate accounting courses where the equity method is introduced and covered in some detail.

INTRODUCTION

Accounting Principles Board (APB) Opinion No. 18 (APB 1971a), The Equity Method of Accounting for Investments in Common Stock, requires that the equity method of accounting for a common stock investment be used when an investor's ownership percentage, usually between 20 percent and 50 percent, provides the investor significant influence over the operating and dividend decisions of the investee. Common stock investments in corporate joint ventures also require the use of the equity method. The equity method is also required by APB Opinion No. 18 when control exists under a parent/subsidiary relationship but consolidated statements are not appropriate, and when the parent company is required to issue "parent-only" financial statements. Companies also use the equity method in accounting for an investment in a subsidiary, even though the subsidiary will be consolidated for external reporting purposes.

Advanced accounting textbooks present consolidation techniques and procedures from the standpoint of the parent's use of both the cost and equity methods. With respect to the equity method, one or more of the following three approaches are generally presented:

1. The "simple" equity method: Under this method, the parent's investment account reflects the price paid plus the parent's share of the subsidiary's net income less dividends.

2. The "partial" equity method: This method is the same as the "simple" equity method, except that the parent also adjusts its investment and subsidiary income accounts each period for any excess of cost over book value (or vice versa) as the undervalued (overvalued) assets and/or liabilities are used by the subsidiary in its earnings process.

3. The "full" or "complete" equity method. The parent extends the "partial" equity method and adjusts its accounts for intercompany transactions such as intercompany inventory profits that are unrealized at a financial statement date.

Several advanced accounting texts (1) present the full equity method in their consolidated statement working paper pedagogies. In these texts, many of the entries made by the parent company to adjust its accounts for unrealized profits on intercompany transactions would be different or would require modification if the parent issued "parent only" statements, or if the subsidiary was not consolidated.

The above paragraph is not a criticism of these textbooks, as their objectives are directed toward the preparation of consolidated financial statements. All of the equity-method approaches listed above, in addition to the cost method, are appropriate pedagogies. (2) In all of these texts, the consolidated statement working papers and resulting consolidated statements are correct in all respects, regardless of the method used by the parent company to account for its subsidiary investment. However, there appears to be a void in the literature with respect to accounting for intercompany transactions when a parent/investor uses the equity method to account for its investment in a subsidiary/investee and consolidation is not appropriate. (3)

The purpose of this paper is to discuss and illustrate a modified approach for the parent/investor to account for these intercompany transactions when the parent/investor uses the full equity method, but does not consolidate the subsidiary/investee. (4) The following two examples will be used as a basis for discussion:

1. Sale of merchandise by parent to its 80 percent-owned subsidiary (downstream sale).

2. Sale of merchandise by an 80 percent-owned subsidiary to its parent (upstream sale).

Although these examples incorporate a parent/subsidiary relationship, the discussion and conclusions would also apply to an investor/investee relationship in which the investor owned, for instance, 30 percent of the investee's common stock.

Because of their similarities to a sale of merchandise except for differences in timing (the period over which gains and losses are realized), intercompany sales of land or depreciable assets will not be presented. However, the discussion and conclusions would also conceptually apply to these types of intercompany transactions.

USE OF THE EQUITY METHOD IN PRACTICE

In practice, there are many companies that use the equity method under the circumstances discussed at the beginning of this paper. For example, the 2000 edition of Accounting Trends and Techniques, an annual survey of accounting practices followed in annual reports of 600 companies, reported that of 409 companies with investments in common stock, 236 used the equity method (AICPA 2000). As examples, Microsoft, Dow Chemical, Coca-Cola, Kerr-McGee, Dynegy, Merck, and Anheuser-Busch use the equity method in accounting for investments in common stock in which significant influence, but not control, is present. With respect to corporate joint ventures, Union Carbide uses the equity method to account for its investments in 20 percent- to 50 percent-owned partnerships and corporate investments (joint ventures).

The equity method is also used in "parent only" financial statements. For example, in the United States this practice often occurs in company filings with the SEC, e.g., Form 10-K. Even though consolidated statements are the primary statements required in a Form 10-K, parent-only statements are also required as supplementary information under certain circumstances. From an international perspective, parent-only statements historically have been the primary financial statements for Japanese and other Asian companies. For European companies, it is common for parent-only statements to be presented in annual reports as supplementary information.

EXAMPLES

Parent (Investor) Sells Merchandise to Subsidiary (Investee)--Downstream Sale

Company S was organized at the beginning of Year 1 and issued common stock for $200. Immediately after the formation of S, Company P purchased 80 percent of S's stock in the open market for $160. Balance sheets for the two companies immediately following P's acquisition of S appear in Exhibit 1. During Year 1, P sold merchandise that cost $150 to S for $200 (a 25 percent gross profit rate). The merchandise was priced to sell for $250, and during Year 1, 60 percent of the merchandise was sold by S to nonaffiliates. S sold the remaining 40 percent of the merchandise to nonaffiliates in Year 2.

For simplicity, it is assumed that these transactions were all in cash, and that no other transactions occurred during the two-year period. Income taxes are ignored, and Company P employs the full equity method in accounting for its investment in S. Following the procedure used in advanced texts, it is assumed that the parent records its share of the subsidiary's reported income disregarding any intercompany transactions. The parent then makes appropriate adjusting entries on its books for intercompany transactions.

S sold 60 percent of the merchandise in Year 1 and 40 percent of the merchandise in Year 2. Therefore, S would report a net income of $30 for Year 1 [.60 x ($250 Sales - $200 Cost) = $30] and $20 for Year 2 [.40 x ($250 Sales - $200 Cost) = $20].

Exhibit 2 presents P's journal entries and financial statements for the two-year period. Panel A of Exhibit 2 presents the approach used in advanced texts, and Panel B presents the modified approach suggested in this paper. Panel C presents the Year 1 and Year 2 financial statements for P and its unconsolidated subsidiary under the modified approach in Panel B.

The first entry each year in Panels A and B records P's 80 percent share ($24) of S's reported income of $30. The second entry each year in Panels A and B is the adjusting entry for intercompany profit, and it highlights the modification required if S is not consolidated. The traditional approach shown in Panel A reduces P's subsidiary income and investment accounts for unrealized profit in S's ending inventory at the end of Year 1, and increases P's investment and subsidiary income accounts when the profit is realized in Year 2.

However, P's subsidiary income account actually requires no adjustment since P's share (80 percent) of S's reported income of $30 relates to S's transactions with nonaffiliates. P's accounts that require adjustment are its sales and cost of goods sold accounts relating to merchandise not resold by S to nonaffiliates. Therefore, in the second set of entries in Panel B, Year 1, P's sales account is debited for $80, which represents the sales price of goods (from P's standpoint) held in inventory by S at the balance sheet date. Cost of goods sold is credited for $60, which is the cost to P of the inventory held by S. Finally, the investment account is credited for $20. This entry is reversed in Year 2 when S sells the remaining inventory to nonaffiliates.

Since S is controlled by P, and since S sold 60 percent of the merchandise to outsiders in Year 1 and 40 percent to outsiders in Year 2, the resulting sales and cost of goods sold figures for P shown in Panel C represent P's realized profit on goods sold to S and resold by S to nonaffiliates. At the end of Year 1, the $164 balance in P's investment account may be explained as follows. S correctly reports $230 of net assets as a separate entity ($150 cash plus $80 inventory). From P's standpoint, $20 represents the unrealized profit in S's inventory. Thus, carrying the Investment in S at $184 (.80 x $230) overstates the investment since the merchandise has not been sold to nonaffiliates. In summary, S's $230 of net assets can be disaggregated as follows:

Reported net assets of S             $230
Less:
 Minority interest in S (.2 x $230)  (46)
 Overvaluation of S assets from P's
  standpoint                         (20)
 Balance of P's equity in S          $164

Panel C of Exhibit 2 presents the financial statements for Company P for Years 1 and 2 based on the Panel B entries each year. Notice that the modified approach provides consistency in P's gross profit across time, e.g., a 25 percent gross profit rate. Finally, P's net income each year (a one-line consolidation) equals consolidated net income if consolidation had been appropriate:

                                      Year 1   Year 2

Consolidated sales
 .60 x $250                            $150
 .40 x $250                                     $100
Consolidated cost of goods sold
 .60 x $150                            (90)
 .40 x $150                                     (60)
Minority interest in S's net income
 .20 x ($150 - $120)                    (6)
 .20 x ($100 - $80)                              (4)
Consolidated net income                $ 54     $ 36

In summary, the modified approach prevents classification errors on P's income statement when there are downstream sales of merchandise. Without these modified entries, P's subsidiary income will be understated, and P's sales and cost of goods sold will be overstated in the year of the sale (compare entries in Panel A and Panel B). When the unrealized profit is realized in the following year, subsidiary income will be overstated, and P's sales and cost of goods sold will be understated. In practice, this classification error could be significant if the subsidiary is not consolidated, if "parent only" statements are required, or if an investor/investee relationship, rather than a parent/subsidiary relationship, exists. P's gross profit numbers and its components may send different signals than subsidiary/investee income to investors and other financial statement users with respect to permanent vs. transitory components of earnings. This classification error could also affect several financial statement ratios based on P's sales and cost of goods sold numbers, e.g., the inventory turnover ratio. Similarly, if the intercompany transaction involved a downstream sale of land or a depreciable asset, and the modified approach was not used, then P's reported gain on the sale could send different signals than subsidiary/investee income. (5)

Subsidiary (Investee) Sells Merchandise to Parent (Investor)--Upstream Sale

Company S was organized at the beginning of Year 1, issued common stock for $150 cash, and immediately used the cash to purchase inventory. Shortly after the formation of S, Company P purchased 80 percent of S's stock in the open market for $120. Balance sheets for the two companies immediately following P's acquisition appear in Exhibit 3. During Year 1, S sold the inventory of merchandise to P for $200 (a gross profit rate of 25 percent). The merchandise was priced to sell for $250, and 60 percent of the merchandise was sold by P to nonaffiliates during the year. P sold the remaining 40 percent of the merchandise to nonaffiliates in Year 2.

As with the downstream sale, it is assumed that these transactions were all in cash and that no other transactions occurred during the two-year period. Income taxes are ignored, and Company P employs the full equity method in accounting for its investment in S. Following the procedure used in advanced texts, it is assumed that the parent records its share of the subsidiary's reported income disregarding any intercompany transactions. The parent then makes appropriate adjusting entries on its books for intercompany transactions.

Since S sold the merchandise to P, S's reported net income for Year 1 would be $50 ($200 sales less $150 cost of goods sold). S had no transactions in Year 2.

Exhibit 4 presents P's journal entries and financial statements for the two-year period. Panel A of Exhibit 4 presents the approach used in existing advanced texts, and Panel B presents the modified approach suggested in this paper. Panel C presents the financial statements for Year 1 and Year 2 for P and its unconsolidated subsidiary under the modified approach.

In Panel A of Exhibit 4 for Year 1, the first entry records P's 80 percent share ($40) of S's reported income of $50; the second entry reduces subsidiary income and P's investment by 80 percent of the unrealized inventory profit of $20. In Panel A, the only entry for Year 2 reverses the second entry made in Year 1 when the inventory profit is realized in Year 2. Notice that the adjusting entries for unrealized profit (Year 1) and realized profit (Year 2) in Panel A of Exhibit 4 are identical to the adjusting entries for unrealized and realized profit in Panel A of Exhibit 2, except for the amounts. In the downstream case, the amount of the adjustment is $20. In the upstream case, the amount of the adjustment is $16 (.80 x $20).

Panel B of Exhibit 4 presents the journal entries required by P under the modified approach suggested in this paper. For Year 1, the first entry records P's share of S's reported income. In the second entry, subsidiary income is debited for $40 because all of S's net income arose from intercompany sales to P. P's cost of sales is overstated by $24 (.60 x $40) and is credited for this amount. Before S transferred the merchandise that cost $150 to P, P had a $120 (80 percent) interest in the inventory. When P transferred $200 in assets (cash) to S, P immediately had an 80 percent interest ($160) in these assets, a net decrease to P of $40 ($200 - $160) attributable to the acquisition of the inventory. Therefore, the merchandise cost to P is $160 ($120 + $40).

The merchandise cost to P of $160 also represents the $150 cost to the consolidated entity plus the profit of $10 (.20 x $50 = $10) accruing to the minority interest. From P's standpoint, this $10 increase is sometimes called an "adjunct cost." (6) Since P sold 60 percent of the merchandise, the cost of goods sold to P is $96 (.60 x $160 cost = $96). Finally, inventory is credited for $16 (.80 x $20 unrealized profit), and the inventory reported on P's balance sheet is $64 (.40 x $160 cost = $64). The $4 inventory increase compared to the downstream amount in Exhibit 2 (the adjunct cost) represents the portion of the minority interest profit in P's ending inventory [.20 x .40 x ($200 sales price -- $150 cost) = $4]. The investment account balance of $160 at the end of Year 1 represents 80 percent of the underlying $200 of S's net assets (cash). Since S has only cash that is valued correctly, there is no adjusting entry needed for P's investment in S's account. Finally, notice that in Panel B, P makes no journal entries in Year 2 relative to its interest in S, since S had no operations in Year 2.

Panel C of Exhibit 4 presents Company P's financial statements for Years 1 and 2, based on the Panel B entries. Since S had no transactions other than its sales to P, subsidiary income does not appear on P's income statements. As with the downstream case, notice that the modified approach provides consistency in P's gross profit across time, e.g., a 36 percent gross profit rate. Finally, P's net income each year (a one-line consolidation) equals consolidated net income if consolidation had been appropriate:

                                     Year 1  Year 2

Consolidated sales                    $150    $100
Consolidated cost of goods sold        (90)    (60)
Minority interest in S's net income
  [.20 x ($50 reported income
   - $20 inventory profit)]             (6)
  [.20 x ($20 inventory profit                  (4)
   realized)]
Consolidated net income               $ 54    $ 36

In summary, the modified approach prevents classification errors on P's income statement and balance sheet when there are upstream sales of merchandise. Without these modified entries by P, subsidiary income will be overstated, cost of goods sold will be overstated, and gross profit will be understated in the year of the sale. Also, P's investment account will be understated, and its ending inventory will be overstated on its balance sheet. When the unrealized profit is realized in the following year, P's subsidiary income will be overstated, P's cost of goods sold will be overstated, and P's gross profit will be understated.

As with the downstream example, these classification errors may send misleading signals to users of P's financial statements. For example, current assets and ratios based on current assets, e.g., the current ratio, would be affected since inventory is a current asset and the investment is a noncurrent asset. As another example, the classification errors could affect several financial statement ratios based on P's cost of goods and inventory numbers.

SUMMARY AND CONCLUSIONS

This paper has presented a modified approach of accounting by the parent/ investor for intercompany transactions under the "full" or "complete" equity method of accounting when "parent only" statements are required, or when consolidation is not appropriate (the subsidiary is not consolidated or an investor/investee relationship exists).

The approach presented in this paper should not be interpreted to be conceptually preferable to, or more correct than the traditional approach presented in advanced accounting texts. Each has different objectives. Advanced accounting texts focus on the preparation of consolidated financial statements, and all of the approaches used in these texts result in correct consolidating working papers and consolidated statements. The modified approach presented in this paper focuses on the use of the full equity method when consolidated statements are not appropriate. This modified approach is important as it prevents classification errors in the parent/investor's financial statements, which may impact the usefulness of these statements to investors and other statement users. Additionally, students should benefit from being exposed to this modified approach in advanced accounting courses and perhaps in intermediate accounting courses where the equity method is usually covered in some detail.

EXHIBIT 1

Company P and Company S--Beginning of Year 1
Company P Owns 80% of Company S
(Downstream Sale of Merchandise [P Sells to S])

                              Company
                            P      S

Assets
 Cash                             $200
 Inventory                $150
 Investment in S (80%)     160

 Total assets             $310    $200

Equity
 Common stock             $310    $200

 Total equity             $310    $200
EXHIBIT 2

Downstream Sales of Merchandise
Year 1 and Year 2

Panel A: Journal Entries for Company P under the Full Equity Method
(Traditional Approach Used in Advanced Accounting Texts)(a)

Year 1

Investment in S                  24
 Subsidiary income                   24
 To record P's share of S's
 reported income.
 .80 x ($150 - $120)

Subsidiary income                20
 Investment in S                     20
 To defer inventory profit.
 .25 x (S's ending inventory of
 $80)

Year 2

Investment in S                  16
 Subsidiary income                   16
 To record P's share of
 S's
 reported income.
 .80 x ($100 - $80)

Investment in S                  20
 Subsidiary income                   20
 To recognize profit
 now realized.
Panel B: Journal Entries for Company P under the Full Equity Method
(Modified Approach for Parent/Investor under Nonconsolidation)

Year 1

Investment in S                   24
 Subsidiary income                    24
 To record P's share of S's
 reported income.
 .80 x ($150 - $120)

Sales                             20
 Cost of goods sold                   60
 Investment in S                      20
 To eliminate intercompany sales
 and defer inventory profit.

Year 2


Investment in S                   16
 Subsidiary income                    16
 To record P's share of S's
 reported income.
 .80 x ($100 - $80)

Investment in S                   20
 Cost of goods sold               60
 Sales                                80
 To record sales deferred
 in Year 1 now made by
 nonaffiliates in Year 2.
Panel C: Company P Financial Statements (Modified Approach)

Year 1

Income Statement
 Sales ($200 - $80)               $120
 Cost of goods sold ($150 - $60)  (90)
 Gross profit                     $ 30
 Subsidiary income                  24
 Net income                       $ 54
Balance Sheet
 Cash                             $200
 Investment in S
  ($160 + $24 - $20)               164
                                  $364
 Common stock                     $310
 Retained earnings                  54
                                  $364
Year 2

Income Statement
 Sales                            $ 80
 Cost of goods sold               (60)
 Gross profit                     $ 20
 Subsidiary income                  16
 Net income                       $ 36
Balance Sheet
 Cash                             $200
 Investment in S
  ($164 + $16 + $20)               200
                                  $400
 Common stock                     $310
 Retained earnings ($54 + $36)      90
                                  $400

(a) In the Pahler and Mori text, P uses intercompany sales and
intercompany cost of goods sold accounts to record its transactions
with S. Under this approach, P makes the following entries for
inventory profits:

Intercompany profit deferral
 (income statement account)          20
 Deferred profit (contra account to
 Investment in S)                        20
(To defer inventory profit at the
 end of Year 1.)
Deferred profit                      20
 Intercompany profit recognition
 (income statement account)              20
(To recognize inventory profit
 realized in Year 2.)
EXHIBIT 3

Company P and Company S--Beginning of Year 1
Company P Owns 80% of Company S
(Upstream Sale of Merchandise [S Sells to P])

                              Company
                            P      S

Assets
 Cash                     $200
 Inventory                        $150
 Investment in S (80%)     120

 Total assets             $320    $150

Equity
 Common stock             $320    $150

 Total equity             $320    $150
EXHIBIT 4

Upstream Sale of Merchandise
Year 1 and Year 2

Panel A: Journal Entries for Company P under the Full Equity Method
(Traditional Approach Used in Advanced Accounting Texts) (a)

Year 1

Investment in S                   40
  Subsidiary income                   40
  To record P's share of S's
  reported income.
  .80 x ($200 - $150)

Subsidiary income                 16
  Investment in S                     16
  To defer inventory profit.
  .80 x [inventory profit of
  $20 ($20 = .25 x $80)]

Year 2

No entries by P under the equity
 method.
S had no operations in Year 2.

Investment in S                   16
  Subsidiary income                   16
  To recognize profit
  now realized.
Panel B: Journal Entries for Company P under the Full Equity Method
(Modified Approach for Parent/Investor under Nonconsolidation)

Year 1

Investment in S                   40
  Subsidiary income                   40
  To record P's share of S's
  reported income.
  .80 x ($200 - $150)

Subsidiary income                 40
  Costs of goods sold                 24
  (.60 x $40)
  Inventory (.40 x $40)               16
  To defer ending
  inventory profit.

Year 2

No entries by P under the equity
 method.
S had no operations in Year 2.
Panel C: Company P Financial Statements (Modified Approach)

Year 1

Income Statement
  Sales                          $150
  Cost of goods sold             (96)
  Gross profit                   $ 54
  Net income                     $ 54

Balance Sheet
  Cash                           $150
  Inventory ($80 - $16)            64
  Investment in S ($120 + $40)    160
                                 $374

  Common stock                   $320
  Retained earnings                54
                                 $374

Year 2

Income Statement
  Sales                          $100
  Cost of goods sold             (64)
  Gross profit                   $ 36
  Net income                     $ 36

Balance Sheet
  Cash                           $250

  Investment in S                 160
                                 $410
  Common stock                   $320
  Retained earnings ($54 + $36)    90
                                 $410

(a.) In the Pahler and Mori text, S uses intercompany sales and
intercompany cost of goods sold accounts to record its transactions
with P. Under this approach, S makes the following entries for
inventory profits:

Intercompany profit deferral (income statement account)  20
Deferred profit (balance sheet contra account
reclassified as credit to inventory upon consolidation)      20
(To defer inventory profit at the end of Year 1.)
Deferred profit                                          20
Intercompany profit recognition (income statement
account)                                                     20
(To recognize inventory profit realized in Year 2.)

(1.) See Baker et al. (1999); Beams et al. (2000); Fischer et al. (1999); Jeter and Chaney (2001); Larsen (2000); Pahler and Mori (2000). Of these, the Larsen (2000) pedagogy is based on the partial equity method. The remaining texts present both the partial equity method and the full equity method either in the chapters or chapter appendices.

(2.) An article by Nurnberg (2001, 122-123) in Accounting Horizons suggests that, in practice, the cost method dominates the equity method for internal purposes.

(3.) An accounting interpretation of APB No. 18, issued in 1971, briefly described several equity method alternatives, but did not provide definitive guidance on this issue (APB 1971b).

(4.) SFAS No. 57 (FASB 1982) requires an extensive set of disclosures for related-party transactions. These disclosures, however, do not obviate the need for the modified recognition procedures suggested in this paper.

(5.) Unless the modified entries were made, P's subsidiary income would be reduced by the amount of the gain on sale from P to S, and the gain on sale would appear on P's income statement.

(6.) See Smolinski (1963).

REFERENCES

Accounting Principles Board (APB). 1971a. The Equity Method of Accounting for Investments in Common Stock. Accounting Principles Board Opinion No. 18. New York, NY: AICPA.

-----. 1971b. The Equity Method of Accounting for Investments in Common Stock. Accounting Interpretations of APB Opinion No. 18. New York, NY: AICPA.

American Institute of Certified Public Accountants (AICPA). 2000. Accounting Trends and Techniques. New York, NY: AICPA.

Baker, R., V. Lembke, and T. King. 1999. Advanced Financial Accounting. Burr Ridge, IL: Irwin/McGraw-Hill.

Beams, F., J. Brovzovsky, and C. Shoulders. 2000. Advanced Accounting. Upper Saddle River, NJ: Prentice Hall.

Financial Accounting Standards Board (FASB). 1982. Related Party Disclosures. Statement of Financial Accounting Standards No. 57. Norwalk, CT: FASB.

Fischer, P., W. Taylor, and R. Cheng. 1999. Advanced Accounting. Cincinnati, OH: South-Western College Publishing.

Jeter, D., and P. Chaney. 2001. Advanced Accounting. New York, NY: John Wiley & Sons, Inc.

Larsen, J. 2000. Modern Advanced Accounting. Burr Ridge, IL: Irwin/McGraw-Hill.

Nurnberg, H. 2001. Minority interest in the consolidated retained earnings statement. Accounting Horizons (June): 119-146.

Pahler, A., and J. Mori. 2000. Advanced Accounting Concepts and Practice. Orlando, FL: The Dryden Press/Harcourt College Publishers.

Smolinski, E. 1963. The adjunct method in consolidations. Journal of Accounting Research (Autumn): 149-178.

Lanny G. Chasteen is a Professor at Oklahoma State University.

Time to prepare this manuscript was provided by the Oklahoma State University Research Foundation.