In this session, we ask ourselves, why don't we de consolidate a subsidiary's equity when we divest of it? When we divest of a subsidiary, we get rid of its inventory, we deconsolidate its PP&E. We de consolidate its debt. So why don't we deconsolidate its equity? To help us answer this, it helps to look at what happens when we buy a company and we consolidate the two companies balance sheets together. Let's have a look at this workout to help explain it. In this workout company A acquires 100% of company B for 25 in cash, and we're asked to consolidate the balance sheets. So the first thing we need to do is take companies A's balance sheets, add on companies B's, balance sheets, and ask are there any deal adjustments? For instance, cash is going to go down by 25, add it all together. That will get our consolidated figures. So let's start doing the consolidated column first. I'll take company A's current assets plus company B's. Then we'll add on any deal adjustments and we'll come back to them in a second. I do exactly the same thing for their non-current assets, their liabilities and their equity. And then I sum up their total assets and I sum up their total liabilities and equity. Let's just check that it balances and it does total assets 120, total liabilities is 120. Next, we need to put some deal adjustments through. And the first one is going to be the current assets. Current assets will go down by 25. That's the cash that we've spent buying the company. So company A has spent 25 buying company B. So if you now look at their current assets, we have company a 100 plus company B's 20, that's 120 are, but hang on, we've also spent 25. So at the end of the deal we've got 95 of current assets when consolidated. Next up, I need to work out if there's been any goodwill in this deal and there has, the company we're buying was only worth about 15. Its book value of equity or fair value of equity was 15, but we've spent 25 on it. That means if I'm buying something worth 15, but I've spent 25 overpaid, I've paid some kind of premium for that, that's going to create 10 of goodwill. So we've now consolidated all of their assets. There's 105, we've consolidated their liabilities of 25, but we're still unbalanced the tune of 15. And what happens here is that we have to take Company B's equity and we have to zero it out. What you can imagine is that we've bought Company B's equity and we've kind of ripped up their shares and thrown them away. We've taken their shares from the shareholders, said, thank you very much, here's some cash. And those shares that we've bought from, I'll just rip them up And throw them away. So what we're now left with is company as equity of 80 is now the consolidated equity of 80 company B's. Equity is not consolidated when you make an acquisition. And that brings us back to our original question. Why don't we de consolidate a subsidiary's equity when we divest of it? And the answer is because we didn't consolidate it when we acquired it in the first place.