Exam 2 Flashcards
4.1
goodwill is the difference btwn the FV of the acquiree and the FV of the net identifiable assets
4.2
consolidated F/S will never report intercompany receivable. The intercompany receivables would show up on the individual books of the companies involved, but the amts would be eliminated prior to consolidation
4.3
consolidated stockholder’s equity balance is always equal to the balance of the total equity from the parent’s books
4.1.4
550 = 1500 -(100+200+450+1000-300-500)
4.1.5
the consolidated balance sheet should only show the retained earnings balance of the parent company
4.2.1
goodwill is not amortized, but instead is tested for impairment at least annually
4.2.2
goodwill is not amortized, thus no amortization expense is recorded. Because goodwill was found to be unimpaired, the entire AMT of the existing goodwill would be reported
4.2.3
all intercompany loans and profits must be eliminated in a consolidation, thus the entire balances should be eliminated
4.2.4
400 =1700-1300
5.1.1
Under the equity method, consolidated retained earnings will always equal the retained earning balance
of the acquiring company (A company) at the date of acquisition regardless of the percentage owned.
The retained earnings balance of the acquired company (B Company) is eliminated in consolidation.
This will continue to be true if the parent uses the fully-adjusted equity method to account for its
investment
5.1.2
Because the consolidated balance sheet contains the assets of the parent company as well as the
assets of the subsidiary, total assets of the parent company will always be less than total assets
reported on the consolidated balance sheet.
5.1.3
The only amount included in the consolidated retained earnings balance is the retained earnings
balance from the parent’s books.
5.1.4
The only accounts receivable from affiliates that will be eliminated from the consolidated balance sheet
are receivables from consolidated entities (Winn Corporation). Thus, the receivable from any
unconsolidated investees (Carr Corporation) would be reported on the consolidated balance sheet.
[AICPA Adapted]
5.2.1
Subsidiary dividends declared have no effect on consolidated retained earnings (because the parent’s
retained earnings appear as the consolidated retained earnings, but they do decrease the noncontrolling
interest just as they decrease the controlling interest.
5.2.2
The noncontrolling interest’s proportionate share of the subsidiary’s income is allocated based on the
percentage of ownership in the subsidiary held by the noncontrolling shareholders.
5.2.3
650=500+200-50
5.2.4
95=956+239-1000-100
5.2.5
251=.2*(956+239+190-5-125)
6.1
all intercompany sales and COGS must be eliminated in consolidation to prevent double counting
6.2
500=400+350-250
6.3
56=40*1.4
6.4
$56,000. The revenue would be overstated by the amount of cost of goods sold that
should have been eliminated.
