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mutual stock method (EC-CS)

Consolidation (EC-CS)

An accounting technique in the consolidation of investments that is typically used in managment consolidation in the following situation:

A consolidation unit (a) is fully consolidated in the top consolidation group in a hierarchy of consolidation groups, and (b) at the same time belongs to lower-level consolidation groups. The unit is consolidated in one of the lower-level groups using the purchase method, and is consolidated in all other groups using the mutual stock method.

The mutual stock method complements the purchase method. This means that the documents posted in the lower-level group that uses the purchase method merely need to be added to the documents posted in the groups that use the mutual stock method.

In management consolidation, the mutual stock method is an alternative to the equity method.

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