Methods of consolidation in current accounting textbooks

This paper describes my attempts to deal with a problem that is perhaps a common one—the problem of teaching consolidations as something other than a matter of choice. To suggest that the problem is common follows from two observations. First, very few neophytes enter the professorate with the intention to teach consolidations. Second, department heads often have to persuade someone to teach the course. Those so persuaded, like myself, face a rather bewildering and complex curriculum. In this paper, I offer some heuristic guidance perhaps useful to others, guidance that is the product of 6 years of trying to overcome the difficulties of teaching out of one's primary area of interest. Apart from the technical complexity of the course, consolidations pose a quite practical, pedagogical problem. While the end sought in the consolidation process is clear—the production of consolidated financial statements—there are a variety of means available to achieve that end. To varying degrees, the means to the end is recording method dependent; i.e., the consolidation process will vary with the way the parent company accounts for its long-term majority-owned investment during the accounting cycle. For expediency, teachers are likely to promote one of these recording methods. Yet the student is likely to encounter other recording methods either in practice or on professional examinations. While this paper does not purport to have the definitive answer to this dilemma, this paper does provide some thoughts which may be helpful in coping with the existence of alternative recording methods.