My apologies for the delayed post, my family has been traveling nonstop for 3 days and I
totally thought yesterday was Wednesday until I woke up this morning and saw it was Friday!
In my opinion, the best way to describe the concept of controlling financial interest is who had
majority control. For example, while the company I work for (PAI) is still operating in its own
fashion, we are now part of a parent company (Brinks) and our financial statements are
consolidated with theirs. They bought our company in full acquisition, meaning they own 100%
of the shares in our company rather than the private board we had before. While members of
the board are still parts of my company with needed roles and important duties, they no longer
have any financial interest in the company, while Brinks has a controlling financial interest in
my company.
If the acquire company wanted to elect the pushdown accounting method, there is nothing
legal that must be done such as paperwork filed. They would however need to adjust the
accounts they have for the revaluations. As stated by Christensen et al., “… involves making an
entry to debit or credit each asset and liability account to be revalued, with the balancing entry
to a revaluation capital account” (Christensen, 2019).
I think the most important thing to consider before deciding to make an election into
pushdown is the parent company and what their preferences might be. While the subsidiary
company may want to use the pushdown method and feel it will work best for them, if this
isn’t going to mesh well with the parent company or if the parent company feels there could be
some confusion/misstatement in the process then this is something that needs to be heavily
focused on. While the subsidiary still has the ability to employ the method, it wouldn’t be wise
to jump into without an understanding of the parent companies opinion on the matter.
Christensen, T., Cottrell, D., & Budd, C. (2019). Advanced Financial Accounting, Twelfth Edition.
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