Topic #1: Subsidiary Purchase
When a parent company looks to purchase a subsidiary, there are many ways to fund the purchase. The two most
popular ways to pay for the new acquisition are: (1) To give the subsidiary cash for its acquisition, and (2) To giv
Topic #1: Introduce yourself
Introduce yourself to your classmates and professor.
What is your name?
Do you have any hobbies?
Legos, tattoos, music, and reptiles would be the big ones for me.
Where do you live?
Huntley, IL (30 minutes west of
In the grand scheme of things, the entire subsidiary is not purchased. This begs the question of
how much control the parent company has over the subsidiary. Please consider the following
What are the three brackets of control?
Hello class and Professor,
Upstream and downstream refers to transactions between related companies, specifically, intraentity transfers in which a gross profit is realized. An upstream transaction occurs when the
investee (subsidiary) sells an item to th
Hello class and Professor, topic 1
From a consolidated perspective neither a sale nor a purchase has occurred. An intra-entity transfer is
merely the internal movement of inventory, an event that creates no net change in the financial position
of the busi
Hello class and Professor,
In many cases, a parent company gains control of a subsidiary by purchasing most, but not all of
its outstanding stock (i.e. 80%). In other cases, however, a parent may gain control of a
subsidiary by purchasing 100% of its outs
Topic: Evaluating the Not-For-Profit Entity
In the accounting world, you find that there are many benefits to becoming a not-for-profit entity.
These may be so considerable that traditional for-profit entities forgo their profit making
potential. With thi
Topic: Comprehensive Annual Financial Report (CAFR)
State and local governments are accountable to much more than private investors.
They are accountable to the community as a whole. Communities are required to
publish a comprehensive annual financial rep
Topic #1: Hedging
Although a company would never dispel gains from currency fluctuations, they truly hate
accounting for the losses. This is why minimizing risk is so important. It is absolutely necessary
to retain a firms profits from selling a product o
Topic #1: Segment Reporting
Just as a house has rooms, a company has departments. These can be internal or external. These
departments may be significant enough to have individual investor impact. If this is the case,
they must be reported.
Now address th
Topic #1: Variable Interest Entities
There are many forms of relationships a firm can have with another organization. One of these
common forms is the variable rate entity. Please consider this concept as you answer the
Describe a var
Topic #1: One Plus One Equals One
In the case of human relations, marriages occur frequently. Once the business combination
occurs, the assets and liabilities of the company become one. This is the same when a parent
company buys a subsidiary corporation.
Topic #1: Reciprocity?
When dealing with a continued consolidation, there are several issues to consider. The first issue is dealing with the
concept of reciprocity. Please consider the following questions:
Does the same team of accountants create the tra