AFM491 Chapter Notes - Chapter 1: Financial Asset, Joint Venture, Mutual Fund

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM491
• Professor: Robert Ducharme

Document Summary

Two primary reasons why a company invests in the shares of another company: advance strategic objectives, parent-subsidiary relationship, associate. Significant change in the performance of the investee compared with budgets, plans or milestones: changes in expectation that the investee"s technical milestones will be achieved. Significant change in the market for the investee"s product. Significant change in the market for the investee"s equity. Significant change in the global economy or the economic environment in which the investee operates. Significant change in the performance of comparable entities. Identifying parent-subsidiary relationships: subsidiary: entity that is controlled by another company, the parent, control. Selling and purchasing of goods or services: managing financial assets during their life. If another party is formulating the policies of a subsidiary, the controller must have the ability to change or modify the policy decisions: non-shared control, can only be one controlling party.