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AT&T: Equity Method Investments

In: Financial Analysis of Mergers and Acquisitions

Author

Listed:
  • Eli Amir

    (Tel Aviv University)

  • Marco Ghitti

    (SKEMA Business School)

Abstract

Unlike the purchase method, the equity method deals with investments in which the investor has significant influence over the investee but not control. The investments under the equity method are recorded as assets on the investor’s balance sheet and the share in the net income of affiliates is presented on the investor’s income statement. AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications, media, and technology industries. During June 2018, AT&T completed the acquisition of Time Warner, a giant media, and entertainment conglomerate. As part of the acquisition of Time Warner, AT&T had investments in affiliates under the equity method. Using the information in AT&T’s financial statements we explain the differences between three methods for intercorporate investments: full consolidation under the purchase method, single-line consolidation under the equity method, and the proportionate consolidation method.

Suggested Citation

  • Eli Amir & Marco Ghitti, 2020. "AT&T: Equity Method Investments," Springer Books, in: Financial Analysis of Mergers and Acquisitions, chapter 0, pages 217-223, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-61769-1_12
    DOI: 10.1007/978-3-030-61769-1_12
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