The purchasing company uses the cost method to account for this type of investment.
The Plans were filed with and approved by the Securities and Exchange Commission in accordance with Section 11A of the Securities Exchange Act of 1934.In business, consolidation or amalgamation is the merger and acquisition of many smaller companies into much larger ones.In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group company as consolidated financial statements.Under the equity method, the purchaser records its investment at original cost.This balance increases with income and decreases for dividends from the subsidiary that accrue to the purchaser.Such disclosures are: When a company purchases 20% or less of the outstanding common stock, the purchasing company’s influence over the acquired company is not significant.
(APB 18 specifies conditions where ownership is less than 20% but there is significant influence).
The Consolidated Tape Association (CTA) oversees the dissemination of real-time trade and quote information in New York Stock Exchange LLC (Network A) and Bats, NYSE Arca, NYSE American and other regional exchange (Network B) listed securities.
Since the late 1970s, all SEC-registered exchanges and market centers that trade Network A or Network B securities send their trades and quotes to a central consolidator where the Consolidated Tape System (CTS) and Consolidated Quote System (CQS) data streams are produced and distributed worldwide.
Treatment to the acquired company: The acquired company records in its books the receipt of the payment from the acquiring company and the issuance of stock.
FASB 141 Disclosure Requirements: FASB 141 requires disclosures in the notes of the financial statements when business combinations occur.
Regular dividends are recorded as dividend income whenever they are declared.