There are many reasons why a business enterprise may establish a subsidiary corporation. These reasons often include, for example: (1) the parent company desires to engage in a new line of business activity unrelated to its current business; (2) the existing or projected revenues from the new line of business activity are substantial; (3) the business enterprise prefers not to expose its assets to the liabilities associated with the new business line; or (4) the new business activities may carry risks of liability unacceptable to the parent; (5) the parent is a public corporation and it desires to keep the subsidiary privately held; (6) the parent wants to posture the subsidiary for going public without affecting the parent's shareholders; or (7) that the organization desires to reward certain employees with increasing compensation, etc.
Accounting Standards Board Paper
Financial accounting is a broad term and is used in all nations. There are different cultures, values, political and economic systems and the goal for these systems is to build economic development. Many businesses do most of there business globally and there became a need for a unified system to improve multinational commerce. In 2002 the international accounting standards and the FASB joined together to develop accounting standards that could work for domestic and cross boarder financial reporting (). The IASB and the FASB also worked to make financial reporting practicable and compatible. In 2002 the FASB and IASB advertised a memo that states the significant step would be made toward formalizing the merge of the FASB and the IASB ( Financial Accounting Standard Board, 2010). Several factors promoted the two boards to come together. The FASB and IASB engaged in the convergence project to remove a variety individual differences between US GAAP and International Financial reporting Standards(). The IASB and FASB adopted a understanding known as the Norwalk agreement...
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