Define and discuss "control" as defined by the FASB.

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Expert Solution

FASB has Issued the revised definition of what constitutes the control of an entity. Under the current rules, the condition for controlling the financial interest has the ownership of the majority voting interest, unless the control is temporary and does not rest according to the ownership of the majority of voting interest. FASB's main goal is to provide the CPAs with better tools just for analyzing the complex corporate structures.

SOME PERSONS BELIEVE THAT THE REVISED ED ALSO GIVES CPAs the BETTER working definition of what constitutes the control than in 1995 ED, in which FASB did not approve. Observers mostly agree to the ED which will pass but does not all are certain they will solve the current problems.

THERE IS NO MORE GENERAL AGREEMENT THAT THE NEW standard is needed. Few companies may take unfair advantage of these current rules. Because the current standard also draws the bright lines, CPAs find them less subjective & are more comfortable. More of the subjective rules may create conflicts among the financial statement preparers and the auditors.

ekkarill92 answered 1 year ago

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