F4 - M5 - Acquisition Method: Part 2

Question 1

Under U.S. GAAP, noncontrolling interest (full goodwill method) is calculated as follows:

Answer 1

Noncontrolling interest (on BS) = Fair value of subsidiary x NCI %

Question 2

Under U.S. GAAP, goodwill is calculated as follows (full goodwill method):

Answer 2

Goodwill = Fair value of subsidiary – Fair value of subsidiary’s net assets

Question 3

_____ allows the use of the full goodwill method on a transaction-by-transaction basis.

Answer 3

IFRS

Question 4

The preferred method under IFRS is the partial goodwill method, which calculates goodwill and noncontrolling interest as follows:

Answer 4

1) Goodwill = Acquisition cost – Fair value of subsidiary’s net assets acquired, 2)Noncontrolling interest (on BS) = Fair value of subsidiary’s net identifiable assets x NCI %

Question 5

The measurement period adjustments , the following adjustments can be made: The subsidiary’s _____ and ______ may be adjusted to better reflect their values on the acquisition date.

Answer 5

assets; liabilities

Question 6

For Measurement period adjustments: New subsidiary assets and liabilities that existed on the _______ may be recognized

Answer 6

acquisition date