When Management Controls More Than 50% of the Shares of the Firm

question 39

True/False

When management controls more than 50% of the shares of the firm, they must be concerned with the potential of a proxy fights than can lead to takeovers of the firm and the replacement of management.

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Definitions:

Consolidation Adjustments

Adjustments made in the preparation of consolidated financial statements to eliminate the effects of intercompany transactions and balances among the entities being consolidated.

Gain on Sale

The financial profit earned from selling an asset at a higher price than its purchase price or book value.

Equity Method

A method of accounting that allows an investor to recognize gains and losses through their share of an associate's profits or losses, adjusting the value of their investment accordingly.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) for global use.