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When is consolidation into one entity needed? Explain

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Address the following:

Define the term business combination and differentiate across various forms of business combinations.
Discuss the motives for business combinations.
Describe when consolidation of financial information into a single set of statements is necessary.

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Solution Summary

Your discussion is 322 words plus a reference and mentions three kinds of combinations, four motives and when consolidation is required.

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Define the term business combination and differentiate across various forms of business combinations.

A business combination is a transaction where one firm purchases control over another firm. This can be done in various ways, with cash or stock or other consideration, but the result is that there are two or more entities that are united into one economic entity so that consolidated financials are required. The forms vary such as:

Statutory merger: One company gets the assets of another and the second company dissolves.

Consolidation: Two or more ...

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Carol Sargent, PhD
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  • MSc, University of Virginia
  • PhD, Georgia State University
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