Consolidations & Outside Ownership
Although most parent companies possess 100% ownership of their
subsidiaries, a significant number establish control with a lesser
amount of stock.
If the parent doesnt own 100% of the company, Non
Consolidation of Financial Information
Financial statements that represent a parent and its subsidiaries as a SINGLE
ENTITY are known as consolidated financial statements.
Consolidation is required by GAAP when one company can control and direct
The Equity Method of Accounting for Investments
GAAP recognizes 3 ways to report investments in other companies:
The method selected will depends upon the degree of influence the
investor has over the in