BUS 420 Chapter Notes - Chapter 3: Financial Statement

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Occurs when one company, the acquirer, obtains control of one or more businesses (ifrs 3) Diversify into a new market and /or geographic region. Access to new customers, products or services, expertise or capabilities (technology) When occurs, consolidated financial statements are required to report the combined financial position and results of operations of the parent and the subsidiary. Conglomerate business combinations involves regular business operating in widely different industries. Horizontal business combination involves business whose products are similar. Vertical business combination involves business where the output from one can be used as input for the other (manufacturer) Friendly management and the board of directors of both companies recommend that their shareholders approve the combination proposal. Hostile management and board of the target company recommends that its shareholders reject the combination proposal and many employ various defenses. The power to direct the activities that most significantly affect the investee"s return.

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