If the investor holds enough common stock to control the investee (50% or more common stock ownership), then the two corporations are no longer separate accounting entities and therefore they no longer may maintain separate accounting records.

Question

Quizplus · Accepted Answer

Even if an investor holds enough common stock to control the investee, both corporations can still maintain separate accounting records. The consolidation for reporting purposes does not eliminate the requirement for each entity to maintain its own accounting records.

If the Investor Holds Enough Common Stock to Control the Investee