Controlling can be defined by any company or individual owning
more than 10% of all outstanding common stock. Or if an individual
or company owns more than 50% of voting stock. Push-down
accounting is an exciting concept that allows accounting of acquired
entities to be "pushed down" the owner's financial statements. The
board of directors should make the determination based on the
companies stock value as well as the value of its net assets
Controlling financial interest is referring to a company or their parent
company holding the majority of the company's stock. This is defined
in FASB ASC 810 as, "[t]he term subsidiary has been defined as “an
entity … in which another entity, known as its parent, holds a
controlling financial interest” (ASC 810). A parent company does not
need to hold all of a corporate subsidiary’s common stock, but at
least majority ownership is normally required for the presentation of
consolidated financial statements. Most, but not all, corporate
subsidiaries are wholly owned by their parents.
To elect pushdown accounting, the acquirer or parent company must
hold control of the entity. A form of control is owing the majority of
common shares/stock.
The most important decision to make during this whether or not to
consolidate financial statements.
