Advanced Financial Accounting - C243
complete study guide
Special Purpose Entity (SPE) - Correct AnswerA financing vehicle that is not a substantive
operating entity, usually created for one single purpose - can be a corporation, trust or
partnership
Spin-Off - Correct AnswerOccurs when the ownership of a newly created or existing subsidiary
is distributed to the parent's stockholders surrendering any of their stock in the parent
company. Therefore, the company divests itself of the subsidiary because it is owned by the
company shareholders
Split-Off - Correct AnswerOccurs when the subsidiary's shares are exchanged for shares of the
parent, thereby leading to a reduction in the parent company's outstanding shares
Business Combination - Correct AnswerOccurs when an acquirer obtains control of one or more
businesses
Merger - Correct AnswerA business combination in which the acquired company's assets and
liabilities are combined with those of the acquiring company. In essence, the acquiring company
"swallows" the acquired.
Acquisition Method - Correct Answer
Bargain Purchase - Correct Answer
Consolidated Financial Statements - Correct Answer
Control - Correct Answer
