Why do consolidated financial statements become increasingly important when the purchase differential is very large

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Originally Posted by rob2741

Why do consolidated financial statements become increasingly important when the purchase differential is very large

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When a parent company has equity ownership in a company, financial and tax regulations- dictate how to report such equity- a related company, for example ownership of 80% or more of another corp, requires the parent to file a consolidated tax return with its subsidiary. As the percentage drops, various rules dictate how to report equity in an affiliate.

Not thorough enough