Consolidations

Question 1

In consolidations

Answer 1

The issuance costs related to stocks will be reduced from APIC

Question 2

When the income of acquire is included

Answer 2

from the date of acquisition

Question 3

what happens when parent acquire 90%

Answer 3

still we have to get rid of 100%

Question 4

How to account for cash

Answer 4

Never adjust cash

Question 5

How to calculate goodwill

Answer 5

How much we paid for+Interest already owned+Non-controlling interest-FV

Question 6

Equipment intercompany sales

Answer 6

Always debit equipment for CV. Original cost minus carry value is depreciation. entry is
cash DR
acc.dep DR

Eqip CR
Gain CR

Gain
PPE
ACC.DEP
PPE is what is our book vs what should be it be.
then debt accu.dep and cr. depn for gain

Question 7

Diff between IFRS and GAAP

Answer 7

Consolidation requd when the entity has Controlling financial interest Control is requd whenthe entity has Control over investee Exposure to various terms and power to affect returns
Non controlling interest measured at fair value. NCi may be either measured at fair value orthe proportionate value of the share
Control through VIE

Question 8

what should we do with direct acquisition costs

Answer 8

fair value of the shares given plus the fair value of the contingent consideration is the total amount paid by the acquirer ($200,000 +$10,000 = $210,000). The gain on the transaction is recorded as the net fair value of the acquiree ($350,000 - $70,000 = $280,000) less the amount paid by the Acquirer ($280,000 - $210,000 = $70,000). The $15,000 in direct acquisition costs are recorded as period expenses and not part of the calculation of the gain on the transaction.

Question 9

Intercompany elimination of inventory

Answer 9

credit ending inventory for profit. Real sales entry you will credit sales for intercompany sales to get rid of it debit it.plug is COGS