Prival Company acquires 49.99% of the voting stock of Schaffer Company. From the viewpoint of readers of the financial statements, the most important factor Prival should consider when deciding whether to consolidate Schaffer in its financial statements is:

Question

Quizplus · Accepted Answer

Control over the performance of Schaffer is the most critical factor in determining whether Prival should consolidate Schaffer in its financial statements. Under both IFRS and U.S. GAAP, control is a key determinant of consolidation, not merely the percentage of ownership.

Prival Company Acquires 49