General Electric Company (GE) is a large, diversified corporation with hundreds of subsidiaries. As of December 31, 2000, GE had total consolidated assets of over $437 billion and a market capitalization of approximately $475 billion. This instructional case considers the use of GE's publicly reported financial statement data to illustrate the concepts and procedures related to (1) investment accounting under the equity method and (2) preparation of consolidated financial statements. In addition, the case highlights the effect of required consolidation on ratio analysis as well as the potential influence of accounting disclosure on investorsa' perceptions of firm value. Thus, this case should help you better understand the economic significance of relatively technical accounting procedures by analyzing their effects in a relevant, real‐world setting.
