Sie sind auf Seite 1von 28

Consolidated

Statements:
Date of
Acquisition

Chapter 2

Chapter 2 Learning Objectives (1 of 2)


1.

2.

3.
4.
5.

Differentiate among the accounting methods used for investments,


based on the level of common stock ownership in another
company.
State the criteria for presenting consolidated statements, and
explain why disclosure of separate subsidiary financial information
might be important.
Demonstrate the worksheet procedures needed to eliminate the
investment account.
Demonstrate the worksheet procedures needed to consolidate
parent and subsidiary accounts.
Apply value analysis to guide the adjustment process to reflect the
price paid for the controlling interest.

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

Chapter 2 Learning Objectives (2 of 2)


6.

Develop a determination and distribution of excess (D&D)


schedule that will guide the worksheet procedures needed to
consolidate a subsidiary.
7. Explain the impact of a noncontrolling interest on worksheet
procedures and financial statement preparation.
8. Show the impact of preexisting goodwill on the consolidation
process, and be able to include prior investments in the acquisition
price.
9. Define push-down accounting, and explain when it may be used
and its impact.
10. Demonstrate worksheet procedures for reverse acquisitions
(Appendix)

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

Levels of Investment
Level of Ownership
Initial Recording
Passive
At cost including
generally < 20%
brokers fees

Recording of Income
Dividends as declared

Influential
generally
20%-50%

At cost including
brokers fees

Ownership share of investee


income; dividends reduce
investment

Controlling
generally > 50%

At cost

Ownership share of income;


accomplished by
consolidating subsidiary
income statements with
those of parent

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

Function of Consolidated Statements


Present the results of operations, cash flow, and the
balance sheet of both the parent and its subsidiaries as if
they were a single company

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

Criteria for Consolidated Statements


U.S. GAAP two models
Ownership of over 50% of the voting common stock of
another company. A controlling interest
control may also exist with a lesser percentage of ownership
SEC requires consolidation in certain situations where an
affiliate is not majority-owned.

Variable interest entities VIEs

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

Techniques of Consolidation
Asset acquisition (Chapter 1)
Acquired assets are recorded by acquirer
Automatic consolidation

Stock acquisition (Chapter 2 and following)


Acquired company remains as a separate legal entity
Parent records investment
Consolidation process produces financial statements for the
economic entity

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

100% Stock Acquisition

Assumptions:
Book value of the asset and liabilities represent fair values
Fair value of net assets = $500,000
Price paid equals fair value of net identifiable assets

Acquirers Journal Entry:


Investment in Subsidiary S 500,000
Cash
500,000
2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

Consolidating the 100% Stock Acquisition


Parents Investment in Subsidiary S account is eliminated
against the equity accounts of the subsidiary

EL

Common Stk- Company S


Retained Earnings- Subsidiary S
Investment in Subsidiary S
Worksheet 2-1

200,000
300,000

500,000

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

Adjustment of Subsidiary Accounts


Usually the price paid exceeds the book value of
subsidiarys net assets

Fair values exceed book values


Unrecorded intangibles may exist

Elimination entries required:


EL to eliminate Investment In account against equity of subsidiary
D to distribute the remaining cost to the acquired assets

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

10

100% Stock Acquisition

Assumptions:
Parent pays $700,000 for the investment in S
Price paid exceeds fair value of net identifiable assets

Acquirers Journal Entry:


Investment in Subsidiary S 700,000
Cash
700,000
2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

11

Consolidating the 100% Stock Acquisition


EL C Stk-Company S 200,000
Retained Earnings-Company S 300,000
Investment in Company S
500,000
D1 Inventory (increase to $120,000) 20,000
D2 Equipment (increase to $400,000) 100,000
D3 Goodwill (excess of price paid) 80,000
D
Investment in Company S
200,000
Worksheet 2-2
Parents Investment in Company S account is eliminated against the
equity accounts of the subsidiary; accounts are adjusted to fair value
and goodwill recognized.
2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

12

Sample (Subsidiary) Company Data

Parental, Inc. issues 20,000 shares $1 par stock; fair value $25 for
100% Samples stock.
$25,000 acquisition costs are expensed when incurred.
2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

13

Parentals Journal Entries


To record the acquisition:
Investment in Sample Company
C Stk (20,000 shares par $1)
Additional Paid-in Capital
To record associated costs:
Acquisition Expense
Cash

500,000

25,000

20,000
480,000

25,000

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

14

Value Analysis Schedule

Note:
Company fair value ($500,000) exceeds fair value of net assets
($365,000)
Accounts will be adjusted to fair value
Goodwill will be recognized
2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

15

Determination and Distribution Schedule:


Account Adjustment and Goodwill

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

16

Consolidating the 100% Stock Acquisition


EL

Common Stock- Sample


Addnl Paid-in Capt - Sample
Retained Earnings -Sample
Investment in Sample

D1 Inventory
D2 Land
D3 Buildings
D4 Equipment
D5 Copyright
D6 Goodwill
D
Investment in Sample
Worksheet 2-3

10,000
90,000
60,000
5,000
30,000
100,000
20,000
50,000
135,000

160,000

340,000

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

17

Bargain Purchase
Acquisition price is less than the fair value of the
subsidiary net identifiable assets
Acquisition journal entries

Record investment at value of consideration given


Expense all acquisition costs

Consolidation process

Acquired assets and liabilities are consolidated at their fair


values
A gain on acquisition is recognized by the consolidated entity

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

18

Value Analysis Schedule


Parental, Inc. issues 12,000 shares $1 par stock; fair value $25 for
100% Samples stock.
$25,000 acquisition costs are expensed when incurred.

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

19

Determination and Distribution Schedule:


Account Adjustment and Gain

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

20

Consolidating with a Noncontrolling Interest


Parent acquires less than 100% of the subsidiary but still
exercises control.
Non-Parent owner interest is referred to as
Noncontrolling Interest (NCI)
Parents investment account is eliminated against its
ownership percentage of the subs equity accounts
Subsidiary accounts are adjusted to full fair value
regardless of controlling interest percentage; adjustment
allocated to Parent and NCI

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

21

Value Analysis Schedule

Note:
Company implied fair value = $400,000 80%
Fair value of identifiable net assets is proportionally allocated
Goodwill is proportionally allocated

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

22

Determination and Distribution Schedule:


Account Adjustment and Goodwill; NCI

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

23

Consolidating with a Noncontrolling Interest


EL

C Stk-Sample
8,000
Controlling
Addnl Pd-in Capt-Sample
72,000
Interest
Retained Earnings-Sample
48,000
Investment in Sample

D1 Inventory
D2 Land
D3 Buildings
D4 Equipment
D5 Copyright
D6 Goodwill
D
Investment in Sample
NCI Retained Earnings-Sample
Worksheet 2-5

5000
30,000
100,000
20,000
50,000
135,000

128,000

272,000
68,000

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

24

Valuation Schedule Strategy


Goodwill
1. Parent price Parent%
= Sub Implied fair value
2. Sub implied fair value NCI%
= Fair value attributed to NCI
3. Fair value of net identifiable
assets allocated by ownership
percentage

Gain
Normally NCI value will equal
NCIs share of net identifiable
assets

Exception: NCI value exceeds its


share of net identifiable assets

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

25

Sample Company; Preexisting Goodwill

Preexisting goodwill is not included in fair valuation


2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

26

Preexisting Goodwill
Preexisting goodwill is ignored in value analysis

2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

27

Determination and Distribution Schedule:


Account Adjustment, Preexisting Goodwill, NCI

Worksheet 2-7

D&D schedule adjusts from the preexisting goodwill


to the goodwill calculated in the valuation schedule
Preexisting goodwill
40,000
D&D goodwill
95,000
Goodwill on valuation schedule
135,000
2016 Cengage Learning. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in
whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website or school-approved learning management system for classroom use.

28

Das könnte Ihnen auch gefallen