Beruflich Dokumente
Kultur Dokumente
Statements:
Date of
Acquisition
Chapter 2
2.
3.
4.
5.
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.
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
Controlling
generally > 50%
At cost
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.
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.
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
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.
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
EL
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.
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
Assumptions:
Parent pays $700,000 for the investment in S
Price paid exceeds fair value of net identifiable assets
11
12
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
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
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
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
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
Consolidation process
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
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
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
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
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
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
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
Gain
Normally NCI value will equal
NCIs 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
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
Worksheet 2-7
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