F3 NoteCards- Deck #2

Question 1

Acquisition Method: record acquisition at:

Answer 1

FV at date transaction closes

Question 2

Direct Costs associated with an acquisition are:

Answer 2

Expensed

Question 3

Stock Registration and Issuance Costs with an acquisition are:

Answer 3

A direct reduction of the value of the stock issued

Question 4

Indirect Costs associated with an acquisition are:

Answer 4

Expensed

Question 5

Bond Issue Costs associated with an acquisition are:

Answer 5

Capitalized and amortized

Question 6

To Calculate NCI (GAAP): (non-controlling interest)

Answer 6

FV of Company X % Ownership = Acquisition Cost

Then, take FV of Company and multiply by % not owned

Question 7

To Calculate Goodwill (IFRS)- Partial Goodwill Method

Answer 7

Take goodwill and multiply by % owned

Question 8

Best Way to Remember Acquisition Method

Answer 8

CAR IN BIG

Question 9

To Calculate Intercompany Sales

Answer 9

Separate revenues less consolidated revenues = inter company revenues

Question 10

To Calculate Payables Due for Intercompany Sales

Answer 10

Separate AR balances less consolidated AR balance = payables due for intercompany sales

Question 11

To Calculate Unrealized Interco Profit Eliminated

Answer 11

Separate inventory balances less consolidated inventory balance = unrealized interco profit eliminated

Question 12

Intercompany Transactions: what to do with them

Answer 12

Eliminate 100% of them, since they lack the criteria of being “arm’s length”

Question 13

If you do not consolidate, do you eliminate intercompany transactions?

Answer 13

No. Not consolidated = not eliminated