Purchase method


 

Purchase method is one of two basic principles of capital consolidation which assumes a purchase of participation through the holding company, whereby the funds for the purchase of the participation flow out of the network of affiliated companies to the previous owner. Under the assumption of the purchase, consolidation is conducted in such a way that it is as if what has been purchased by the holding company is not a participation, but rather assets and liabilities represented by the participation.

(Opposite: pooling-of-interest method)

 

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