In this M&A accounting overview, we're going to look at two types of M&A accounting Imagine we've got a holding company and that holding company has a 20-50% stake in another company EA Company, that's an equity affiliates or an equity associate company Because we've got significant influence but not control I.e. to have control normally we'd need more than 50% of the voting shares Because we've got significant influence but not control that means we have to use equity method accounting Now the same is also true if you have a joint venture I.e. you have shared control with someone else (you won 50% and they own 50%) So that's our first method, equity method accounting But now I imagine that our holding company has control of some other entities I.e. they own a majority of votes for example In our examples, we're going to say these are subsidiary 1 and 2 And they have 100% control, they own them outright As they have control, even it was less than 100% (if was 90%, 80%, 70%) As they have control, they must produce consolidated financials for all subs or subsidiaries This means instead of just having the holding company's accounts on its own And subsidiary 1's accounts on it's own and subsidiary 2's accounts on its own, you have to bring them altogether So actually to find all the assets, you'll take the assets of the holding company plus the assets of subsidiary 1 and 2 and you'll find the assets of the holding company And the same will be the case with liabilities and equity