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FAR > F4M4 > Flashcards

F4M4 Flashcards

1
Q

Attributes of acquisition method

A

measured at fair value

over 50% means you consolidate

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2
Q

JE for acquisition of parent common stock

A

Dr. Investment
Cr. CS (@par)
Cr. APIC

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3
Q

How much is stock caluclated for in acqusitions

A

FV of transaction close

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4
Q

Application of the acquisition method

A
  1. 100% of the net assets acquired (regardless of the percentage acquired) are recorded @ FV with any unallocated amount in goodwill
  2. When companies are consolidated, the subsidary’s entire entity (CAR) is removed
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5
Q

Acquisition consolidation is for (external or internal) only

A

external

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6
Q

Acquisition consolidation adjusting items

A

CAR IN BIG

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7
Q

CAR stands for

A

Common stock
APIC
RE

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8
Q

IN stands for

A

Investment in subsidiary is eliminated

NCI is created (if not 100% owned)

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9
Q

BIG

A

Balance sheet of subsidiary is adjusted to fair value

identifiable intangible assets are recorded

goodwill or gain is requied

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10
Q

Purpose of CAR

A

eliminate stockholder’s equity

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11
Q

Purpose of Investment in subsidiary

A

eliminate parent’s investment account

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12
Q

Purpose of NCI

A

if not 100% owned

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13
Q

Purpose of balance sheet adjustment to fair value

A

adjust to fv at the acquisition close date

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14
Q

Purpose of identifying intangibles

A

record intangibles (premium) paid

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15
Q

Purpose of Goodwill

A

plug

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16
Q

CAR synonyms

A

net book value

equity

assets-liabilities

17
Q

Retained Earnings BASE

A

add beginning RE
add net income
subtract dividends
= end retained earnings

18
Q

Investment in subsidiary

A

original cost measured at FV on the date of acquisition

19
Q

Costs in acqusition and thier treatment

A

all direct costs are expensed nad stock registration fees are reduction in value of investment

20
Q

Contingency consideration

A

adding an estimate of probable settlement cost to investment in subsidiary

multiply the percent probablility to the contingent consideration

21
Q

Journal entry for contingent consideration

A

Dr. Investment

Cr. Estimated Liability for Contingency Consideration

22
Q

Adjustement of contingent consideration

A

Dr. Expense

Cr. Estimated liability for contingency consideration

FAR (41 decks)

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