Chapter 8. Business Combinations and Consolidated Financial Statements
Definitions of Terms
An entity pays cash, stock, and/or debt to acquire some portion of the voting stock of another entity, and the acquired entity continues to exist as a separate legal entity.
An entity gains control over the assets of another entity.
A new entity is formed to acquire other entities through an exchange of stock, after which the acquired entities are dissolved as separate legal entities.
- controlling financial interest
Equity investors have voting rights to make decisions about an entity’s activities, must absorb the entity’s expected losses, and are entitled to the entity’s expected residual ...