Consolidation When there is Complex Ownership Structure

Advanced financial accounting PowerPoint presentation. In this presentation we’re going to discuss a consolidation that when there is a complex ownership structure, so more complex ownership structure comparing the direct ownership, which is what we’ve normally been dealing with, with structures such as multi level ownership and reciprocal ownership, get ready to account with advanced financial accounting. Normally, when we think about our consolidation structure, we’re dealing with a direct ownership situation which looks like this direct ownership type of situation, it gets more complex. Of course, if we have more complex type of ownership structures, such as a multiple multi level ownership structure where we have a parent owning a subsidiary, that basically we have an indirect ownership, let’s say in another subsidiaries, that’s going to be more complex for us to deal with or if we have a situation where we have reciprocal ownership, where the parent has ownership a controlling interest in s, but as also has some ownership in p, right. We’ve been dealing with basically P parent company owning portion of S. So if we talk about direct ownership we’re talking about the parent has, as has controlling interest in every subsidiary. So that’s going to be of course, this situation.

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Subsidiary Sells Additional Shares to Nonaffiliate

Advanced financial accounting PowerPoint presentation. In this presentation we will discuss a consolidation process where we have a parent subsidiary relationship and the subsidiary sells additional shares to a non affiliate. So we have the subsidiary selling shares not to the parent, but to a non affiliate what will be the effect on the consolidation process? Get ready to account with advanced financial accounting. We are talking about a situation here where the subsidiary is selling more stock or additional stock to someone outside of the organization, someone who is not affiliated not to the parent or some other subsidiary, what will be the effect in the consolidation process? It’s going to increase the total stockholders equity of the consolidated entity by the amount received by the subsidiary in the sale. That of course would make sense because if you imagine the transaction taking place, then if they got cash for it, for example, cash would be going up the other side going to the equity so it’s going to be increasing the total stockholders equity will increase total shares outstanding for the subsidiary reducing the percent ownership of the parent company. So if the subsidiary then issues more shares and they didn’t go to the parent, then that means there’s going to be more shares outstanding. That means the shares that the parent owns will go down, therefore, their percentage ownership will typically go down. In that case, we’ll increase the amount assigned to the non controlling interest.

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Forms of Business Combinations

This presentation we’re going to talk about forms of business combinations, which is basically external expansion, two types of entities that are going to be related in some way, shape or form, get ready to act because it’s time to account with advanced financial accounting, forms of business combinations. Now remember, we’re talking about expansion. Here, we’re thinking about expansion. We’ve got the two categories, we’ve got the internal expansion and external expansion. We’re considering here, the external expansion, we have an organization that now wants to expand and they’re going to be consolidated in some way or have two separate entities that will be combining. So now we’re talking about two separate legal entities typically separate legal entities that are now going to be combined in some way shape or forms. The forms of business combinations can be the statutory merger, the statutory consolidation, and the stock acquisition. So if you think about, in other words to separate legal entities and say, Alright, well how can these two separate legal entities be combined in some type of way, you can imagine some different Kind of scenarios in which that could take place. So and when you’re imagining those different types of scenarios, you’re going to be thinking about, okay, well, what’s going to be the key factor here, it’s going to be the controlling interest. So what’s going to be a situation where you had two separate legal entities, and now they’re they’re going to be have some controlling relationship, which could be that they’re combined together under one entity at some point or they are having a parent subsidiary type of relationship, in which case the control would be over the 50%. So that control concept is what you want to keep in mind here.

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Allocate Expenses to Classes

This presentation we’re going to take a closer look at external business expansion, which includes things like mergers and business combinations, get ready to act, because it’s time to account with advanced financial accounting. Before we move into the external expansion, you want to give a review and keep your mind on what our focus is we’re talking about a business that is expanding. When we think of it about expansion, we can break that expansion into internal and external expansion. So we have a business expanding into new areas do segments, we can think of it as an internal or external expansion. In a prior presentation, we talked a little bit more on the internal expansion, in which case you might have a situation where a parent creates a subsidiary or a parent basically just creates another division possibly, and expands in that format. Now we’re going to be going to the external expansion, in which case we’re talking about two entities. So we have two separate legal entities that in some or two separate entities in some case in some way, shape reform are coming together. So now we’re going to have an expansion where we have an external expansion. So if we’re thinking of thinking about this, from the from the standpoint of one company, we’re thinking about ourselves as one company and we are expanding, then we’re thinking about the expansion externally, that we are going to be combining in some way shape or form with another company. Now, the format and form in which that combination can take place can be various we can have various forms of that combination, it could result in a parent subsidiary type of relationship, or it could result in the parent basically consuming that another company and bringing them into the overarching parent company.

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Accounting Related to Ownership & Control

In this presentation, we will take a look at accounting methods which will relate to and depend on ownership and control, get ready to account with advanced financial accounting. Accounting related to ownership and control methods used to account for investments in common stock will depend on the extent of influence or control, the investor can exercise over the investi. So in other words, we’re gonna have different methods depending on the level of control. Now, if we’re going to use different methods, we need to have some kind of definition we need to have some lines in terms of when we’re going to apply these different methods. What does it mean to have different levels of control? And then how do we apply those in practice so we can have some kind of standardization for that.

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Accounting Related to Ownership & Control

In this presentation, we will take a look at accounting methods which will relate to and depend on ownership and control, get ready to account with advanced financial accounting. Accounting related to ownership and control methods used to account for investments in common stock will depend on the extent of influence or control, the investor can exercise over the investi. So in other words, we’re gonna have different methods depending on the level of control. Now, if we’re going to use different methods, we need to have some kind of definition we need to have some lines in terms of when we’re going to apply these different methods. What does it mean to have different levels of control? And then how do we apply those in practice so we can have some kind of standardization for that.

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