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.
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.
In this presentation, we will take a look at an overview of the consolidation process, get ready to account with advanced financial accounting, consolidation process overview we’re talking about a situation where we have two or more separate entities that are under a common control. So the basic kind of format of that you’re imagining here, then you have a parent and a subsidiary, these are going to be connected in some way shape or form because the parent has control over the subsidiary, we can imagine more complex situations, for example, having one parent and multiple subsidiaries as well. The entities will be showing as if they are one entity. So if we have a situation like this, if there’s a control type of situation, it’s quite possible then we’re going to have the the subsidiary and the parent These are two separate companies have a consolidated basically a financial statement. So the financial statement the idea of that being we’re going to take these two financials and represent them as if these two separate entities in this case, two or more can be more than two are one entity. This means two or more sets of books are merged into one set of financial statements. So obviously, what does that look like from a practical standpoint, we have the parent company, we have this subsidiary company, they have two sets of books, we’re gonna have to take those two sets of books and put them together for the financial statements. Here is an example of a slightly more complex situation where we still have parent subsidiary relationships but multiple pole subsidiaries in this case, so we have the parent subsidiary one where there’s a 75% ownership. So we’re over we have a controlling interest, we’re over that 51, we’re going to say there’s a controlling interest here, therefore there’s going to be a consolidation. So we’re gonna have a consolidation subsidiary to is owned 52%. So we’re still over the 51.