9/17 & 9/24 Chapter 4 Flashcards
minority income and minority equity
two new accounts
Dr Non controlling interest in net income
Cr Non controlling interest in net assets
controlling interest formula
consol income CR
NCI in net income DR
Controlling income CR
which retained earnings do we use for the elimination entry
we only use the RE of the acquisition date if it is in our period. if it isn’t we use the beginning of the year RE in our period
variable interest entity
if they are a beneficial interest then we would consolidate if they guarantee the debt
Noncontrolling interest in net assets
this is in the equity section on the balance sheet
non controlling interest in net income
on income statement and is an expense,
full consolidation
says we are going to consolidate 100% of the company
entity theory
we are using this the others ones are not used means we are taking 100%
fair values
when we acquire things then we are getting them at fair value
Book value calculations
NCI30% Inv Acct70% Common Stock APIC RE Beginning Balance 78000 182000 \+ Net Income - Dividends Ending Balance
Chapter 4
learn
parents books
investment account usually
when we credit inventory for the consolidated financial statements
we credit COGS to account for the decrease in inventory
amortization of excess values
you debit the income from investments and
credit the investment account
entry to book the excess
land equip cnt goodwill inventory investment in sub this eliminates the investment amount because we own 100%
basic elimination entry
c/c
RE
Investment in sub
amort excess values
dep 8500
amor CNT13000
COGS 6500
accum amort 13000
acc dep 8500
Inventory 6500if inventory is overvalued
then you decrease inventory and COGS
acquisition cost
goodwill+exces+book value
when purchased at book value
you don’t worry about excess and fair value
Elimination entry
c/s apic RE Inc from sub Investment in Sub Dividends declared
excess value entry
asset 1
asset 2
goodwill
Investment in sub = excess
accum depr entry
eliminate accum depreciation from sub
arms length transactions
transactions that take place between independent parties
any intercompany transactions
eliminated
push down accounting
understand the definition but not how to do it
fV elimination is made on books of the sub and the excess elimination you make on the books of the sub
