Business Combinations

Question 1

Business Combination Snapsot

Answer 1

Combine Assets and Liabilities
Eliminate Subsidiary equity
Eliminate Inter-company Transactions
= Combined Company (Parent Equity plus Non controlling Interest)

Question 2

Goodwill

Answer 2

Difference between the purchase consideration and the fair value of Net identifiable assets.

Question 3

Retain Earning

Answer 3

Beginning Retain Earnings = Net Income - Dividends Declared = Ending Retain Earnings

(Income tax expense is already included in Net Income)