SEC Requires Push-Down<br>
SEC requires push-down accounting for SEC filings when the subsidiary<br>
Is substantially fully owned (97%)
Has substantially no public debt or preferred stock<br>
Establishes a new basis for the assets and liabilities<br>
Based on acquisition price
Arguments against
Subsidiary is not party to the acquisition
Subsidiary receives no new funds, sells no assets
Push-Down Procedure<br>
Assets and liabilities are revalued
Goodwill, if any, is recorded<br>
Retained earnings (prior to acquisition) are eliminated<br>
Push-down capital replaces retained earnings
Includes old retained earnings
Any adjustments to assets and liabilities, including goodwill<br>
Push-Down Differences<br>
The example used 90% ownership by the parent. <br>
SEC requires push-down accounting
Differences between the methods of application will be considerably less<br>
Leveraged Buyouts with a change in controlling interest<br>
Changing accounting basis may be appropriate<br>
