MDS F5 Flashcards
What are the eliminating entries in a pooling consolidation?
1 Eliminate the investment account with a credit
2 Eliminate everything in stockholder’s equity of the subsidiary with debits
3 Put back in minority interest with credits
Eliminate all inter-company items (i.e. interest, rent, dividend income, etc.)
How are translation adjustments of foreign currency handled?
Translation adjustments are included in OCI
What are the eliminating entries in a purchase consolidation?
1 Eliminate the investment account with a credit
2 Eliminate everything in stockholder’s equity of the subsidiary with debits
3 Re-value assets and liabilities to FMV
4 Put back in minority interest with a credit
5 If not in balance, debit (credit) goodwill
Eliminate all inter-company items (i.e. interest, rent, dividend income, etc.)
What are considered segments to report?
“Three 10%’s must total 75%”
If a segment has 10% of combined revenues, 10% of combined assets, or 10% of profit/loss… it is an identifiable segment
Identified segments must total at least 75% of revenues, assets, or profit/loss…another word “miscellaneous” or “other” can be no more than 25% of revenues, assets, or profit/loss
How are transaction adjustments for foreign currency handled?
Transaction adjustments are included in income from continuing operating on the income statement.
What are the methods for admission of a partner into a partnership?
a Under the goodwill method, an intangible asset (goodwill) is recognized along with the contribution of the new partner.
b Under the bonus method, a “bonus” is paid to or taken from the original partners along with the new partner’s contribution to the partnership.
c Under the exact method, neither goodwill nor a bonus will be recognized with the admission of a new partner. The contribution of the new partner is calculated so that it is exactly in proportion to his/her share of the new partnership.
How are remeasurement adjustments of foreign currency handled?
Remeasurement adjustments are included in income from continuing operations on the income statement
What accounts are effected by purchasing power and how are they effected?
Holding monetary assets during inflation… Purchasing power loss
Holding monetary liabilities during inflation… Purchasing power gain
How are partnership dissolutions handled?
a Under the goodwill method, an intangible asset (goodwill) is recognized along with the departure of the partner.
b Under the bonus method, a “bonus” is paid to or taken from partners with a departure of the partner.
Which gains/ losses for derivative instruments are recognized in OCI?
All gains/ losses for derivative instruments are recognized in current income except the following which are recognized in other operating income:
1 Derivative instruments designated and qualifying as an effective cash flow hedge
2 Derivative instruments for forecasted foreign currency denominated transactions which are effective against the risk of exchange rates.
