When a Parent Company Acquires a Less-Than-100 Percent Controlling Interest

question 118

Essay

When a parent company acquires a less-than-100 percent controlling interest in a subsidiary, what portion of that subsidiary's financial data does the parent consolidate?

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Definitions:

Accounts Receivable

Amounts owed to a company by customers for goods or services that have been delivered or sold but not yet paid for.

Sales on Account

Transactions where goods or services are sold with the understanding that payment will be made at a later date.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest obligations on outstanding debt from its operating income.

Average Sale Period

The average time it takes for a company to sell its inventory, calculated over a specific time frame.