In this presentation, we will expand on the logistics of internal expansion, get ready to act, because it’s time to account with advanced financial accounting. We’re going to take a look now at the steps of the internal expansion. So note we have the two categories of expansion, the internal expansion and the external expansion, internal expansion with a company growing, we’re imagining the company growing, they can either grow internally make it another sub subsidiary, possibly, that would be owned by the parent company creating a parent subsidiary relationship internally, or has some kind of external expansion where we have two separate entities that are going to be together in some way, shape or form. So here, we’re talking about the internal expansion. So we have one company that is then thinking about expanding how are they going to put that expansion together? We’re thinking about the setting up then in this case of another legal entity such as a subsidiary, what steps for that? Well, first, you’re going to have a sub sub subsidiary B. created. So you get the parent company is going to be creating the subsidiary, then we have assets and liabilities are transferred to the new entity. So we’re imagining we have one company that wants to expand possibly have another division or another location that they will be expanding into. They make this subsidiary so they another legal entity created, we typically will think of another corporation that is owned by the prior Corporation, parent subsidiary relationship, the assets and liabilities that are going to be controlled or be part of that new segment are going to be transferred from the parent company now to the subsidiary company. And the key point here is that it’s going to be transferred at book value. And you might be thinking after looking at the external expansion, where you have two separate entities that are coming together and the need for us to then use the basically the acquisition method treat it basically like a sale happening.
In this presentation, we’re going to discuss an Introduction to Business acquisition and expansion, get ready to act, because it’s time to account with business, Advanced Accounting, advanced financial accounting will have to do with the concept of expansion and the accounting related to it. So first we need to know well, what is expansion? What are the types of expansion that can take place? What are the problems with regards to the accounting for it? And then what type of accounting principles can we apply in order to deal with the accounting related to those problems? So when we think about expansion in general of a business, we’re thinking about the growth of a business, typically, you have either internal expansion or external expansion. So those are two categories of expansion. We want to start to visualize in our mind and we got our mind our mind is visualizing a business that is trying to expand how are they going to do that? Are they going to do it with some type of internal growth or some type of external growth? Then we want to think about the legal structure of the of the expansion for example, an expansion often results in a parent subsidiary type of relationship. So, we have different legal entities that are associated in some way shape or form.