Pretend your client is the owner of a privately held manufacturing company with two operational subsidiaries.
Your client wants to consider expanding his investment in Subsidiary 1, and he is willing to consider purchasing additional shares to expand his influence.
Your client is also considering reducing or eliminating his investment in Subsidiary 2.
Your client has asked you to prepare a summary of the accounting issues he should consider in both the expansion of his investment in Subsidiary 1 and the reduction of his investment in Subsidiary 2.
1. Rank the importance of each issue for your client and discuss whether the issues should be considered separately or as part of the larger conversation.
2. Raise any timing issues that must be examined. Debate the most effective way to advise you client.