After the Introduction of the Fair Value Enterprise (FVE) Method

question 14

Essay

After the introduction of the Fair Value Enterprise (FVE) method in Canada, many companies opted to value the non-controlling interest in subsidiaries based on the fair value of the subsidiary's identifiable net assets at the acquisition date instead of valuing the non-controlling interest at its fair value. That is, they opted to use the Identifiable Net Assets (INA) method rather than the FVE method when preparing consolidated financial statements. What motivation might preparers of consolidated financial statements have that would cause them to have this preference?

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Definitions:

Operation of Law

Changes in rights or obligations occurring automatically due to existing legal rules, without the need for action by the parties involved.

Attestation Clause

A provision in a legal document certifying that the document is made willingly and that the signatories are aware of the contents.

Valid Will

A valid will is a legal document that has been properly executed in accordance with the laws governing estate distribution, specifying how a person’s property will be divided after death.

Codicil

A supplement or amendment to a will, allowing for changes or additions without requiring the will to be completely rewritten.