BUSI 2160U Lecture Notes - Lecture 10: Equity Method, Financial Statement, Income Statement
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Strategic investment (cid:272)o(cid:374)sist of (cid:862)co(cid:374)trol(cid:863) a(cid:374)d (cid:862) ig(cid:374)ifi(cid:272)a(cid:374)t i(cid:374)flue(cid:374)(cid:272)e(cid:863) Whe(cid:374) you"re u(cid:374)der (cid:272)o(cid:374)trol, all your (cid:272)o(cid:373)pa(cid:374)ies are put together i(cid:374)to o(cid:374)e fi(cid:374)a(cid:374)(cid:272)ial state(cid:373)e(cid:374)t. Significance influence is when you have a voice; influence choices. Investment increases your income; dividends decreases your income. For (cid:272)o(cid:373)pa(cid:374)ies, e(cid:448)erythi(cid:374)g (cid:272)a(cid:374) ha(cid:448)e do(cid:374)e separately, (cid:271)ut u(cid:374)der ifr everything come together following accounting policies. Why pay > fair value of net assets. *synergies when you put two or more process, and put it together. Why operate two plants, when you can have one and make the same money. Fire employees, and save money because you only have one pla(cid:374)t. it"s (cid:374)ot good for e(cid:373)ployees, (cid:271)ut it"s good for (cid:272)o(cid:373)pa(cid:374)ies & shareholders. Common shares and retained earnings stay the same for acquisition of company. Make all the decisions(100%) , but less risk (ex: 51%). Can buy smaller companies and invest in them (have control), and then put everything together (consolidated financial statements)
