Video: Voting Interest Model

In this lesson, Nick Palazzolo, CPA, breaks down the intricacies of the voting interest model, a fundamental concept in business combinations and consolidations. He clearly explains when and why a company must consolidate its financial statements, specifically if they purchase over 50% of a subsidiary's voting stock. Nick educates on the core principle that ownership allows the parent company to wield control and make decisions which affect the subsidiary's future. Delving into the nuances of US GAAP regulations, he covers exceptions to consolidation, such as instances of legal reorganization or bankruptcy, and contrasts different investment levels using a practical chart. Furthermore, he clarifies the reporting of non-controlling interests (NCI) on the consolidated balance sheet, adding depth to the lesson with the example of a major retail company's acquisition and its implications on equity reporting.