Once an investor has power over an investee, consolidation is automatically required.

Question

Quizplus · Accepted Answer

While power is an important factor in determining whether consolidation is necessary, it is not the only factor. The investor must also have control over the investee, which is determined by examining the substance of the relationship between them. In some cases, an investor may have power but not control, and consolidation would not be required.

Once an Investor Has Power Over an Investee, Consolidation Is