9/17 & 9/24 Chapter 4

Question 1

minority income and minority equity

Answer 1

two new accounts
Dr Non controlling interest in net income
Cr Non controlling interest in net assets

Question 2

controlling interest formula

Answer 2

consol income CR
NCI in net income DR
Controlling income CR

Question 3

which retained earnings do we use for the elimination entry

Answer 3

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

Question 4

variable interest entity

Answer 4

if they are a beneficial interest then we would consolidate if they guarantee the debt

Question 5

Noncontrolling interest in net assets

Answer 5

this is in the equity section on the balance sheet

Question 6

non controlling interest in net income

Answer 6

on income statement and is an expense,

Question 7

full consolidation

Answer 7

says we are going to consolidate 100% of the company

Question 8

entity theory

Answer 8

we are using this the others ones are not used means we are taking 100%

Question 9

fair values

Answer 9

when we acquire things then we are getting them at fair value

Question 10

Book value calculations

Answer 10

NCI30%   Inv Acct70% Common Stock APIC RE
Beginning Balance   78000     182000    
\+ Net Income
- Dividends
Ending Balance

Question 11

Chapter 4

Answer 11

learn

Question 12

parents books

Answer 12

investment account usually

Question 13

when we credit inventory for the consolidated financial statements

Answer 13

we credit COGS to account for the decrease in inventory

Question 14

amortization of excess values

Answer 14

you debit the income from investments and

credit the investment account

Question 15

entry to book the excess

Answer 15

land
equip
cnt
goodwill
   inventory
   investment in sub
this eliminates the investment amount because we own 100%

Question 16

basic elimination entry

Answer 16

c/c
RE
Investment in sub

Question 17

amort excess values

Answer 17

dep           8500
amor CNT13000 
   COGS              6500
    accum amort   13000
    acc dep            8500
Inventory   6500

Question 18

if inventory is overvalued

Answer 18

then you decrease inventory and COGS

Question 19

acquisition cost

Answer 19

goodwill+exces+book value

Question 20

when purchased at book value

Answer 20

you don’t worry about excess and fair value

Question 21

Elimination entry

Answer 21

c/s
apic
RE
Inc from sub
   Investment in Sub
   Dividends declared

Question 22

excess value entry

Answer 22

asset 1
asset 2
goodwill
Investment in sub = excess

Question 23

accum depr entry

Answer 23

eliminate accum depreciation from sub

Question 24

arms length transactions

Answer 24

transactions that take place between independent parties

Question 25

any intercompany transactions

Answer 25

eliminated

Question 26

push down accounting

Answer 26

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