Statement of Financial Accounting Standards
(SFAS) No. 94
Consolidation of All Majority-Owned Subsidiaries
b. Issued in October 1987
SFAS No. 94 amends ARB No. 51,
APB Opinion No. 18 and ARB No. 43 (Ch. 12).
General rule of
controlling financial interest (ARB No. 51)
--> Ownership of majority voting interest
--> Ownership of
over 50% of outstanding voting shares
to general rule (ARB No. 51)
Control does not rest with the majority owner
(Significant doubt on the parent's ability to control the subsidiary)
b. Minority interest in the
subsidiary is large.
c. Foreign subsidiaries.
d. Non-homogeneous operations
(Parent company in manufacturing and
a subsidiary in banking or insurance industry)
SFAS No. 94
keeps exception a.
eliminates exceptions b, c and d.
Consolidation of a
majority-owned subsidiary is required (by
SFAS No. 94)
--> a subsidiary's
minority interest is large
--> a subsidiary is
a foreign company
--> a subsidiary
operates in a heterogeneous industry