Table of ContentsUnit 4 Individual ProjectConsolidated Financial StatementsAT&T, IncGoodwill – AT&TGoodwill – FASBunit 4 Individual ProjectThere are many fundamental principles that dictate the consolidation of financial statements. Some of these factors include the FASB, or Financial Accounting Standards Board. Generally Accepted Accounting Principles, or GAAP, traditionally requires the consolidation of financial reports with the financial reports of any company in which it also has a controlling financial interest. There are two testing models you can use to determine controlling interest: these models are known as the variable interest entity model and the voting interest model. A variable interest entity (VIE) occurs when a company is able to control and structure economic performance and has an obligation to either absorb losses or accept significant benefits. If, using this model, it is determined that a specific company is not a variable interest entity, then it is considered a voting entity. A controlling interest company is one that owns 50% or more of the voting shares in an entity. However, this guideline has some limitations. A controlling company may circumvent VIE guidelines, allowing it to engage in practices that appear unethical. They can only do this by disclosing specific information (“Fasb issues update”, 2014). Say no to plagiarism. Get a custom essay on “Why Violent Video Games Should Not Be Banned”?Get the original essayConsolidated Financial StatementsConsolidated and equity accounting methods are very different. The main difference is that with consolidated accounting, subsidiaries practically do not exist in the area of ​​financial reporting. The subsidiary and parent company financial statements are collated and combined into a single set of financial statements used for reporting purposes only. These new consolidated financial statements are beneficial when an investor has a majority stake in an issuing company and obtains ownership of at least 50% of the total voting stock (Hoyle, Schaefer & Doupnik, 2013). AT&T , IncAT&T, Inc. has recently become a much-discussed topic with its new acquisition of DIRECTV. Before their merger, AT&T already had a significant stake in DIRECTV. AT&T has a wide variety of investments, including 38% in Otter Media Holding, 47% in YP Holding, and a 40% stake in Roots Sports Southwest. They have also invested in other companies, including Leap, Nextwave, Atlantic Tele-Network, NII Holding Inc. and GSF Telecom. Many of their other acquisitions were omitted from the annual financial report. AT&T subscribes to the equity method of accounting for all of its investments in which it owns less than 50% of the voting stock (“AT&T INC 2014,” 2015). This equity method is only used when an investor has a lot of influence over those in which they invest, but without having control via a 20 to 50% stake in the voting shares (Stice & Stice, 2012). This method of accounting shows a company's investments in its financial statements but not in those of the issuing company. Goodwill – AT&TThe asset known as goodwill is intangible and has subjective value. It displays the difference between acquired assets and liabilities (“Goodwill”, 2015). In 2014, AT&T had goodwill of.