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Hi Mike!
1.If a parent bought a subsidiary with the intention to sell it later, should consolidation take place?
2. In the BPP kit,in the answer of a question it says control over a sub has been lost and thus can be excluded from consolidation. Could you explain how and why this is the case?
Thanks.
1) Not if it’s classified as “held for sale”
2) Is this related to the first question? I think not
Control can be lost where the subsidiary appoints a liquidator / administrator / administrative receiver. Or where the bank tells the parent what to do and what not to do in order to protect the bank’s investment. Or where any lender, as a term of the loan agreement, has the right to appoint a majority of the subsidiary’s board of directors
OK?
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