Consolidations: Ch 1 - Business combinations Flashcards
Business combinations
1
Q
Types of share investments
A
Minority passive - little influence
Minority active - significant influence
Majority active - control
2
Q
Is a majority active investment a current or non-current asset?
A
Non-current asset
3
Q
What is an acquirer?
A
Entity that obtains control of acquiree
4
Q
What is an acquiree?
A
Business or businesses that acquirer obtains control of in business combination
5
Q
What is a business combination?
A
Transaction in which acquirer obtains control
6
Q
Explain the principle of control
A
- Investor is exposed, or has rights
- to variable returns from investments and
- has ability to affect returns
7
Q
What does obtaining control mean?
A
Acquirer is in the position to govern financial and operating policies
8
Q
Are the businesses in a group still considered separate legal entities?
A
Yes
9
Q
When shouldn’t a parent present consolidated financial statements?
A
- Parent is subsidiary
- Parent’s investments not publicly traded
- Parent does not file financial statements with regulatory organisation
