What is Voting interest model?
In short
Under the voting interest model, a company consolidates another entity when it has a controlling financial interest, usually by owning more than 50% of its voting shares.
Key takeaways
- Entities are first checked against the variable interest entity model.
- A majority owner doesn't consolidate if it lacks control, for example when the subsidiary is in bankruptcy.
- Noncontrolling interest is reported within equity.
Where it's tested
FAR: Business Combinations & Consolidations — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Acquirer purchases 100% of Target for $1,200,000 cash. Target's identifiable assets have a fair value of $1,600,000 and liabilities assumed have a fair value of $500,000. What should Acquirer recognize?