Consolidation when contiol is gain

AAbdullah6y ago

in the case a company holding 45% of shares while 55% of shares are distributed among small investors none of them holding 20% of shares.. What would be the criteria of control?? can the 45% share holder consolidate ?? is there any condition where less that 50% share holder consolidate its FS??

AAli6y ago#1

This is not the right forum to ask this question. Kindly post it either in Financial Accounting forum or Financial Reporting forum. It is possible that control is exercised by parent entity despite having less than 50% holding. For example the parent has some agreement with the remaining investors that it will have majority voting rights. Control is generally assumed when holding is equal to or greater than 50%, but this is not always the case. The basic criteria which determine whether or not control is present or not are: 1. Parent has right to or is exposed to 'variable returns'. 2. Parent has the power to affect those returns. This is only possible if parent has majority representation in the management of the investee. Hope this helps.

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