Consolidation (EC-CS)

The difference between

• the value of an investor unit's balance sheet item (usually Investment in Subsidiary) at the date of consolidation, and
• the value in the investee unit's balance sheet (typically Stockholders' Equity).

If the investor value is higher (debit difference), this is referred to as an excess of cost over book value (when the equity method is used), an excess of fair value over book value, an undervaluation of (investee) net assets, or hidden reserves.

If the investee value is higher (credit difference), this is referred to as an excess of book value over cost (when the equity method is used), an excess of book value over fair value, an overvaluation of (investee) net assets, or hidden contingencies.

These fair value adjustments can be recorded and amortized during the consolidation of investments if desired.