Business Combinations/Consolidations

Question 1

Consolidated financial statements ignore important ______ relationships and emphasize ________ substance over form

Answer 1

legal; economic

Question 2

Consolidate _____ majority-owned subsidiaries to have one management and one economic entity

Answer 2

all

Question 3

____ consolidate when control is not with owners

Answer 3

do not

Question 4

Companies that have different year ends can be:

Answer 4

consolidated

Question 5

Ownership of less than 20%

Answer 5

use cost method
do not consolidate
less than 20% considered no significant influence

Question 6

Significant influence but 50% or less ownership

Answer 6

use equity method

do not consolidate

Question 7

Greater than 50% ownership

Answer 7

use acquisition method

consolidate