Consolidated financials

Question 1

What is the Equity Method initial carrying value of Investment in Sub?

Answer 1

Beginning Bal. = Cost paid (purchase price)
+ % share of Sub’s Net Income (CV goes up) *Equity earnings
- % share of Sub’s excess depreciation *Equity earnings
- % share of Dividends from Sub (CV goes down)
= Ending CV of Sub (eliminate with Consolidation, not = to FMV)

*Equity earning a sum of the first two lines
-Combine 100% Assets + Liabilities
-Combine 100% of Rev, Exp, Gains, Losses

Question 2

What are the steps for consolidation?

Answer 2

Equity
Assets FV>BV
Goodwill
Liabilities FV>BV
Investment
NCI

Question 3

How to calculate NCI

Answer 3

use the price of stock if given

if not inferred - back into

Question 4

How do you account for net income on the date of acquisition when a sub is purchased on October 1 of the year? And at year end?

Answer 4

Consolidated net income, for the parent on data acquisition would Be just the parents net income, because the sub should not be included yet.
At your end, the consolidated net income would include the parents total income for the year and subs income for the quarter only!