I know what you're saying Snoopy - these accounting standards are relatively complex and hard to understand at times. As I said before, I know NZ IFRS relatively alright but US GAAP not so well at all - all I know is there is a long term goal of convergence.
Under NZ IFRS you account for investments in companies the following way. I'm assuming the same is true for US GAAP under the "control" scenario:
Non-significant influence. IFRS has assumed this is if you own less than 20% voting rights - Simply record at cost or cost then fair value.
Significant influence. IFRS has assumed this is between 20% - 50% voting rights. You account for under the equity method. I.e. Record at cost and recognise the changes of the investors share of net assets and the investors share of profit through the profit and loss. See
NZ IAS 28 for this standard
Control. This is greater than 50% voting rights. You consolidate the accounts backing out a minority interest for the amount you don't control. See
NZ IAS 27 for this standard.
Now to your next point: Negative equity. To me, it makes sense that they are in negative equity as when you think of the history of Agria they:
1) Made a history of losses and therefore had negative "retained earnings."
2) They purchased their interest in PGW with all their spare change.
3) Raised more debt in the process of gaining control of PGW.
By doing this, they "lost" their assets from their balance sheet but kept the debt on it...combine this with their negative retained earnings, they are in negative equity position as a standalone company excluding PGW consolidated amounts.
That is why it is important for Agria to receive dividends from PGW...If you believe PGW will pay big dividends in the future, then Agria may be a good bet. However, they have nothing else going on ($10m Chinese revenue) and you are effectively supporting two corporate structures which makes the whole thing inefficient.