Consolidation - Important Elimination Entries

Question 1

Conso - Important Elimination Entries:

1. To eliminate Investment in Subsidiary and recognize Goodwill/Gain and NCI (assume that there also under valued assets)

And assumed that FV of NCI is given

Answer 1

Dr. Asset (undervalued)
Dr. Share Capital - S
Dr. Retained Earnings - S
Dr. Goodwill (Cr. if gain)
Cr. Investment in Subsidiary
Cr. NCI

Question 2

Conso - Important Elimination Entries:

2. To eliminate intercompany dividends and NCI share of dividends

Answer 2

Dr. Dividend Income (Parent %)
Dr. NCI (%)
Cr. Dividends Declared/Retained Earnings

Question 3

Conso - Important Elimination Entries:

3. To amortize allocated excess (FV>BV)) to identifiable assets (Inventory and Equipment)

Answer 3

Dr. COGS
Dr. Operating Expense (Depreciation Exp)
Cr. Inventory
Cr. Equipment

Question 4

Conso - Important Elimination Entries:

4. To recognize NCI in subsidiary’s adjusted net income

Also, please provide how to compute that NCI share form subsidiary’s NI

Answer 4

Dr. RE
Cr. NCI

Net Income of Subsidiary xx
+/- Amortization (entry # 3)
=Adjusted NI of Subsidiary
Time NCI Ownership %