ACTG 2011 Chapter Notes - Chapter 11: Financial Statement, Retained Earnings, Stock Trader
27 Dec 2014
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Consolidated statements: aggregate the accounting information of a parent company and all of its subsidiaries into a single set of statements. Individual subsidiaries and parent are all separate legal entities: required under ifrs, provides financial information about an entire economic entity rather than individual pieces. Need to find a place to invest temporary surplus of cash; may want to retain cash for future expansion or acquisition, but want moderate return in short-term: can earn dividend, interest and capital gains income. Make strategic investments: purchase another company"s shares to reduce competition and expand presence in the market, may want to diversify. Investee: corporation in which an investor has invested: control: an investor that controls an investee can make all important decisions. Subsidiary: investee that is being controlled: significant influence: investor does not control an investee but can affect important decisions. Must use equty method: passive investment: investor has no influence over decision making of the investee.
