If a company purchases all of the shares of another company with cash it is recorded as an asset purchase and consolidated financial statements are not required.

Question

Quizplus · Accepted Answer

If a company purchases all of the shares of another company with cash, it is considered a stock purchase and consolidated financial statements are required. In a stock purchase, the acquiring company gains control of the other company through the ownership of its shares. As a result, the two companies are consolidated for financial reporting purposes.

If a Company Purchases All of the Shares of Another