Consolidation

Question 1

In consolidation how are sales of equipment from a parent company to a subsidiary be treated?

Answer 1

This transaction should be eliminated in consolidation and restore the PP&E to the parent company at its historical cost, as this transaction wouldn’t ever happened.

Question 2

How is Non control interest calculated at the beginning of the acquisition?

Answer 2

1. Obtain the non controlling interest by subtracting from 100% the % of shares owned
2. Obtain the implied value by dividing the Cash paid / % of share owned .
3. Multiply the implied value * % of share of the non controlling interest.