Question
Perry Company purchases 70% of the voting rights of Sally company with the remaining 30% noncontrolling interest held by Sally former owners, who negotiated the
Perry Company purchases 70% of the voting rights of Sally company with the remaining 30% noncontrolling interest held by Sally former owners, who negotiated the following noncontrolling rights: a). Any new debt above $1 million must be approved by the 30% noncontroling shareholders. b). any dividends or other cash distributions to owners in excess of customary historical amounts must be approved by the 30% noncontrolling shareholders. According to the FASB ASC, what are the issues in determining whether Perry should consolidate A or report the investment under the equity method?
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