F4 M5 Flashcards
Consolidated BS: Includes 100% of the parent’s and subs assets and liabilities (after
eliminating intercomp transactions), but ONLY INCLUDES THE PARENT’S EQUITY.
However, the noncontrolling interest equity (% of sub’s equity that we don’t own) is
separate from the total for parent’s equity. The total equity = parent’s equity +
noncontrolling interest equity
Think of BIG (includes 100% of net assets)
Consolidated IS: Includes 100% of the parent’s/sub’s revs and expenses after the date
of the acquisition (pre-acquisition revs and exps are not included in consolidated IS)
The consolidated IS will show NI (sum of all parents and subs), noncontrolling interest NI
(% of sub’s equity that we don’t own), and NI attributable to only the parent. NI -
noncontrolling interest NI = NI attributable to only the parent
For Statement of OCI, it is the same as in IS
Consolidated SCF: The net cash spent or received in the acquisition must be reported in
the investing section of the SCF (ex: parent spent 25 on a sub that had 1 in cash. A cash
outflow of 24 would be reported)
The assets and liabilities of the sub on the acquisition date must be added to the
parent’s assets and liabilities at the beg of the year in order to determine the change in
cash (ex: A parent reported NP of 600 on Jan 1 and the parent bought a sub on May 1
that had NP of 250. The Dec 31 BS showed NP of 750. This means that there would be
a 100 cash outflow on operating section)
The SCF should show the cash inflows and outflows of the consolidated entity, excluding
cash flows between the parent and sub (intercomp)
The SCF is similarly prepared for a consolidated entity as for a non consolidated entity
except that (1) NI on operating section should include NI attributable to both the parent
and the NCI (2) Financing section should report dividends paid by the sub to
noncontrolling shareholders, and dividends paid to parent by sub shouldn’t be reported
I must eliminate the dividends the sub pays (I would eliminate 100% of them if I own
100%. I should eliminate them based on how much % the parent owns of the sub)
At the date of acquisition, the consolidated equity will be equal to the parent comp’s
equity plus the FV of any NCI. Sub’s equity accounts are eliminated
When a parent consolidates w/a sub using stock, the APIC from the issuance must be
added to the APIC of the parent to get total APIC for the year
