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In module 3 we discussed how an investor company gains control by purchasing an existing business, either through a net asset purchase or a share
In module we discussed how an investor company gains control by purchasing an existing business, either through a net asset purchase or a share purchase. However, not all subsidiaries are a result of the purchase of existing shares. In some cases, the parent company may desire to establish a subsidiary to meet specific needs. In accounting for the business combination, what is one key distinction when a subsidiary is established versus when a subsidiary is as a result of the purchase of shares of an existing company? Do consolidated statements also need to be prepared by the parent when the parent establishes a subsidiary?
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