19

Question 1

when is NCI recorded in I/C transaction of bonds?

Answer 1

NCI is only adjusted if bonds were originally issued by SUB. if parent issues, no affect on NCI

*JE for bond elimination with premium:

bond premium (P) 75
B/P (P) 1M
bond invest (S) 975
(gain) RE - consol’d 100

Question 2

how do we calculate consol’d inv?

Answer 2

inv acq’d from outside parties + inv acq’d I/C - unreaized GP (GP%*I/C inv acq’d) = inv consol’d

• GP% = (total inv - I/C inv) /total inv
• GR: P + S + FV adj = consol inv

Question 3

how do you calculate I/C profit that must be elim’d from EI?

Answer 3

SP - COGS = I/C profit *GP% = EI elim’d

Question 4

how do you calculate consol’d liabilities?

Answer 4

P+S - I/C liabilities = consol’d L

Question 5

how do you calculate share of earnings from sub in a consolidation?

Answer 5

BB + “x” - div paid = EB

*“x” is then multiplied by %own = P’s earnings from sub

Question 6

what is the rule for SE in a consolidation?

Answer 6

SE = P’s + FV NCI

*FV NCI = BB+NI-div = EB

**BB = FV sub * NCI%

***FV sub = acq cost/%own

Question 7

what is NI in a consol?

Answer 7

NI = P - NCI NI

*P already includes S’s income from adding equity earnings after OI

Question 8

in a consolidation, what is the rule for a newly acq’d sub midyear?

Answer 8

NI will only be included from the date of acquisition, therefore only (for ex) equity % til June 30 and 95% thereafter

Question 9

what happens to the sub’s equity accounts when using the acq. method?

Answer 9

100% are eliminated from the sub in consol.

Question 10

how do you calculate consol. FA?

Answer 10

BV P + FV sub

Question 11

how do we record IL under IFRS?

Answer 11

CV - recoverable amount

*recov. amt is greater of PV FCF (or value in use) or NRV

Question 12

how is GW IL reported under GAAP?

Answer 12

2 steps:

• FV RU < CV RU = poss. IL

**assign FV RU - CV RU = GW implied FV

***GW implied FV - GW BV = GW IL

Question 13

is asset impairment or GW impairment listed first?

Answer 13

other impairments should be eval’d first, then GW

Question 14

what are monetary assets?

Answer 14

they are cash/CE whose amounts are fixed in terms of $ (ex = demand deposits, receivables)

*NOT patents/trademarks

Question 15

how are disclosures of changing prices reported on the FS’s?

Answer 15

they are encouraged, but not req’d. therefore, they should be reported in the suppl. info to FS’s

Question 16

how are LT customer-relationship IA’s treated in regards to impairment?

Answer 16

they are subject to the same IL recognition as other LT IA’s that are held and USED

Question 17

in regards to financial reporting, property dividends in excess of merch’s CV over market value is:

Answer 17

reported as a reduction in income

Question 18

what are the JE’s to mark-to-market for equity sec’s?

Answer 18

*for unrealized gains:
DR: valuation account
Cr: unrealized gain

*for unrealized losses:
Dr: unrealized loss
Cr: valuation account

Question 19

what are the JE’s for the sale of equity sec’s?

Answer 19

Dr:cash
Dr: valuation account (elim.)
Cr: realized gain (diff. b/w FV)
Cr: equity sec’s (plug)

Question 20

what are the JE’s for HTM purch and IL?

Answer 20

purch:

*Dr: HTM sec.
Cr: cash

IL:

*Dr: IL
Cr: HTM sec.