In order to have a controlling financial interest, a person must own
50% of their own company or another corporation. This indicates that
a single person is in charge of the majority of the equity of the
company. A person can also have a controlling interest even if they
do not possess a majority of the voting shares because that is still
seen as sufficient. When acquiring a new company, the company
looking to acquire the other company chooses push down accounting
as opposed to historical foundation. Revaluing the assets and
liabilities of a subsidiary of an acquired company is known as push
down accounting. They are directly revalued to their fair values on
the subsidiary's records as of the acquisition date. For each asset and
liability account that is revalued using the push down method, an
adjustment debit or credit entry is needed. The effects that push
down accounting will have on the company's financial statements
must be taken into account before choosing it over a historical basis.
By "pushing down" the recently adopted acquirer's basis, pushdown
accounting creates a new basis for reporting assets and liabilities in
an acquirer's standalone financial statements. To decide if push down
accounting is the best course of action, I think the benefits and
drawbacks should be weighed.
Works Cited:
Christensen, T. E., Cottrell, D. M., & Budd, C. (2019). Advanced
financial accounting
(12th ed.). New York, NY: McGraw-Hill Education.
Rashty, Josef. 2018. "Implications of Pushdown Accounting".
cpajournal.com/2018/03/28/implications-pushdown-accounting/
