Marketable Securities & Business Combinations

Question 1

How do you calculate consolidated stockholder’s equity in a business combination?

Answer 1

Parent co stockholder’s equity + non-controlling interest at y/e.

NCI at y/e = NCI at start of year + NCI share of NI - NCI share of dividends

NCI at start of year: Calculate FV of combo, subtract amount paid to acquire.

NCI share of NI: Beg R/E + N.I. (plug) - dividends = Ending R/E. Then N.I. * ownerhip %

Question 2

How should net assets & liabilities be presented if acquisition price exceeds FV of net assets acquired?

Answer 2

Both assets & liabilities should be presented at FV.