F3 Flashcards
How do you calculate earnings for an equity investment?
Take calculate net income and subtract preferred dividends paid if any.
-Add share of preferred dividends to share of net income for income reported.
How do you calculate earnings on an equity investment when the ownership changes during the year?
You use the original percentage of ownership applicable to the year or part of the year to calculate earnings.
**The periods where cost method was used are RETROACTIVELY stated
What are liquidating dividends?
Dividends received in excess of ….
What is the stockholder’s equity in consolidated financial statements?
The parent’s stockholder’s equity (CAR) + noncontrolling interest (original acquisition interest + share of current year income)
What is goodwill under US GAAP?
Acquisition price minus the fair value of the sub’s net assets (if the price is greater)
-fair value includes NCI
What is recorded to APIC for a biz combo, acquisition?
The difference bewtten FV and par value of stock issued LESS any registration and issuance costs
How to calculate the partial goodwill method for controlling interest (only for IFRS)?
Acquisition cost LESS
FV of sub’s nets assets acquired (FV of net assets x % acquired)
How to calculate the partial goodwill method for NONcontrolling interest for IFRS?
FV of net assets x % of non controlling interest
How do you figure the intercompany profit to eliminate from inventory sales?
- Find the gross profit of the interco sales
- find the percentage of inventory remaining or sold from the interco sales
- multiply sold % times gross profit= interco profit eliminated from COGS
- multiple remaining % times gross profit = unrealized profit eliminated from ending inventory
How are interco bonds recorded?
***The bonds are considered retired
*The difference between the original discount and the premium on reacquisition is recorded as a gain/loss
->then to retained earnings
(LOSS if a premium was paid to retire the bonds)
