Chapter 3 Section 2: Business Combinations/Consolidations Flashcards
1
Q
What is the focus of consolidated financial statements?
A
Substance over form - an economic truth but legal fiction
2
Q
When do you consolidate?
A
When there is an over 50% of voting interest control
Even if they have different year ends
3
Q
How do you handle vertical chains?
A
Consolidate the third into the second, and that combination into the parent.
4
Q
At what percentages do you consolidate and use which method?
A
Cost - do not consolidate - 50% - use either method internally
