Business Combinations Flashcards
1
Q
Consolidated financial statements ignore?
A
Important legal relationships and emphasize economic substance over form
2
Q
When do you consolidate?
A
All majority-owned subsidiaries to have one management and one economic entity
3
Q
When do you not consolidate?
A
When control is not with owners
4
Q
Can companies with different year ends be consolidated?
A
Yes
5
Q
Under GAAP, what does significant transactions of consolidation during the gap period require?
A
Disclosure
6
Q
What method is used when there is no significant influence?
A
Cost method and do not consolidate, less than 20%
7
Q
What method is used when there is significant inluence but 50% or less ownership?
A
Equity method and do not consolidate
8
Q
What percentage is needed in order to consolidate?
A
Greater than 50%
