Advanced Financial Accounting Chapter 1 Notes Essay

2666 Words Sep 30th, 2013 11 Pages
1
Intercorporate
Acquisitions and Investments in
Other Entities

McGraw-Hill/Irwin

Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

The Development of Complex
Business Structures
• Enterprise expansion as a means of survival and profitability
– Size often allows economies of scale
– New earning potential
– Earnings stability through diversification
– Management rewards for bigger company size – Prestige associated with company size

1-2

Organizational Structure and
Business Objectives
• A subsidiary is a corporation that is controlled by another corporation, referred to as a parent company, usually through majority ownership of its common stock
• Because a subsidiary is a separate
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