Advanced Accounting
Advanced Accounting
7th Edition
ISBN: 9781119373209
Author: JETER, Paul K. Chaney
Publisher: WILEY
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Chapter 3, Problem 1Q
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Identify the advantages of acquiring the major voting shares of another company rather than acquiring the complete voting shares.

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Explanation of Solution

The advantages of acquiring majority of acquiring the major voting shares are:

  • This shall avoid the complex process required to take over the complete stock.
  • Acquiring more than 50% of the shares provides effective control; thus there is no need for greater investment.
  • The legal existence of an individual affiliate protects the assets of the parent company from attachment by the subsidiary’s creditors.

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